The Georgian Framework of Operational Risk Management
Operational risk management is mandatory in Georgia for the financial sector, and its statutory framework lies in the Organic Law on the National Bank of Georgia: the mandate, the supervisory toolkit, the sectoral detail and crisis preparedness. At the same time, the operational-risk framework of international banking supervision is a non-Georgian international standard — the National Bank exercises its localized supervision; outside the financial sector operational risk is not statutorily regulated, and the page carries this framework precisely from the perspective of financial-sector subjects.
The Mandate
The National Bank's task is to promote the financial stability and transparency of the financial sector and to protect the rights of consumers and investors. To fulfil this task the bank must promote the stable and efficient functioning of the financial system, the formation of a competitive environment, the control of systemic risk and the reduction of potential risks. Operational risk management is the operational continuation of this mandate: controlling systemic risk is impossible without supervising the risks of institutions' internal processes, systems and the human factor.
The Supervisory Toolkit
The National Bank has full authority to supervise the activity of commercial banks, microbanks, banking groups, non-bank deposit institutions, microfinance organizations, brokerage companies, the stock exchange, central and specialized depositories, asset management companies, accountable enterprises, pension funds, investment funds, currency exchange points, payment system operators and payment service providers, virtual asset service providers and lending entities. For its supervisory functions the bank issues resolutions and orders, gives written instructions, sets additional requirements and restrictions, applies supervisory measures and sanctions, and may demand and receive any information within its competence, including confidential information. Refusal of registration, licensing or the acquisition of a significant share is also possible: where the application threatens the stability of the financial sector, the group structure is not transparent enough or complete information on the source of funds is not submitted — the bank refuses. Correspondence may also be electronic, and where delivery of a document fails, the official document is published on the bank's website and is deemed delivered on the 15th working day from publication.