Central Bank of the Republic of Azerbaijan approves 2026–2027 Bank Supervision Strategy to operationalise risk-based supervision

The Central Bank of the Republic of Azerbaijan has approved a Bank Supervision Strategy covering 2026–2027, setting supervisory priorities for the next two years as it moves to a risk-based supervision approach. The strategy follows the approval of the Central Bank’s instruction on risk-based supervision of banks and builds on the Azerbaijan Risk Assessment System (ARAS) and related supervisory tools developed and tested on pilot banks. The strategy prioritises strengthening banks’ resilience to macroeconomic threats, improving business model sustainability and profitability management, enhancing operational resilience, modernising risk management frameworks, and reinforcing corporate governance, risk culture, and consumer rights protection. To support these priorities, it also targets further development of the regulatory framework, including modernised requirements for risk management and stress testing, bringing parts of the Central Bank’s 2024 recommendations on corporate governance standards in banks into the binding framework, applying requirements on the Internal Capital Adequacy Assessment Process (ICAAP) and Internal Liquidity Adequacy Assessment Process (ILAAP) to increase alignment with Basel III, and integrating climate and ESG risks into regulation and supervision.