The Basel Committee on Banking Supervision has issued for consultation a report on the Range of Methodologies for Risk and Performance Alignment of Remuneration.
The report presents a range of practices and methodologies as possible approaches to aligning remuneration and risk. It focuses on particular issues that may reduce the effectiveness of the risk adjustment process as well as challenges that should be considered by banks, when developing their methodologies, and by supervisors, when reviewing and assessing banks' practices.
The report is intended to enhance banks' and supervisors' understanding of risk-adjusted remuneration. By providing clarification on the design of risk-adjusted remuneration schemes, the committee's report aims to support and promote the greater adoption of sound compensation practices in the banking sector.