The Monetary Authority adopted a
strategic initiative to upgrade
supervisory capabilities to
international best practice
levels by implementing on-site
inspections in 1998. The on-site
inspection represents the
fact-finding part of the
supervisory function, which is
complemented by the analytical
work of the off-site division.
On-site inspections are carried
out for all of the Authority's
licenses, covering banks and
trust, insurance companies,
company managers and mutual
funds. A major objective of the
inspection program is to gain a
thorough understanding of a
financial service provider's
operations, the risks it faces
and how these risks are managed.
The inspection reviews the roles
performed by the board of
directors and senior management
in establishing risk levels, and
the internal control mechanisms
employed to monitor these risks.
Risk categories broadly relate
to credit, market, liquidity,
operational and reputation risk.
On-site work includes a review
and assessment of Lyle
institution's risk management
policies and procedures, control
environment, and compliance with
laws, regulations and
supervisory directives. During
the inspection, individual
transactions are tested to
evaluate the effectiveness of
the control environment.
