Developing an Indigenous Risk Appetite Framework for Banks with Emphasis on Basel Requirements: An Expert Delphi Approach
Keywords:
Risk appetite, Basel requirements, banking risk management, expert Delphi, risk governance, localizationAbstract
Objective: This study aimed to develop and validate an indigenous risk appetite framework for banks with emphasis on Basel requirements through expert consensus.
Methodology: This applied qualitative study combined conventional qualitative content analysis, directed qualitative content analysis, and the expert Delphi method. In the first phase, concepts and components related to risk appetite were extracted and coded from scientific and professional sources. These concepts were subsequently reviewed and classified in relation to banking risk management principles and Basel requirements. Initially, 22 potential experts were identified and assessed using the Adler competency model and criteria including professional experience in banking and risk management, managerial experience, familiarity with Basel requirements, academic background, and experience in risk, credit, and supervision units. Fourteen experts met the eligibility threshold and participated in the qualitative and Delphi phases. Delphi data were collected iteratively and analyzed until an acceptable level of consensus and stability of expert judgments was achieved.
Findings: The qualitative analysis and expert consensus resulted in five main dimensions and 12 subdimensions. The main dimensions were operational and credit risk management, risk management frameworks and policies, organizational culture and employee support, technology, innovation and emerging risks, and financial and market risks. The resulting framework incorporated risk identification, assessment and control; compliance with Basel requirements; risk limits; data-driven decision-making; risk culture; employee empowerment; advanced analytical technologies; emerging risk management; and continuous monitoring of financial and market exposures.
Conclusion: The proposed indigenous risk appetite framework is multidimensional, dynamic, and integrated. Its effective implementation requires alignment among risk governance, regulatory requirements, financial capacity, organizational culture, technological capabilities, and continuous monitoring mechanisms. The framework can provide a practical foundation for improving risk-based decision-making, strengthening accountability, enhancing risk discipline, and increasing banking resilience.
Downloads
References
Atashani, M., Madanchi Zaj, M., & Shidaei Narmighi, A. (2021). The effect of inflation, exchange rate and risk appetite moderating variable on bank efficiency with Bayesian approach. Islamic Finance and Banking Studies, 7(16), 99-132.
Bekaert, G., Engstrom, E. C., & Xu, N. R. (2022). The Time Variation in Risk Appetite and Uncertainty. Management Science, 68(6), 3975-4004. https://doi.org/10.1287/mnsc.2021.4068
Bellardini, L., Murro, P., & Previtali, D. (2024). Measuring the risk appetite of bank-controlling shareholders: The Risk-Weighted Ownership index. Global Finance Journal, 60, 100935. https://doi.org/10.1016/j.gfj.2024.100935
de Zwart, F. (2022). FSB Effective Risk Appetite Framework. In (pp. 1095-1103). Springer. https://doi.org/10.1007/978-981-16-1710-2_41
Filomeni, S. (2024). Securitization and risk appetite: Empirical evidence from US banks. Review of Quantitative Finance and Accounting, 63, 433-468. https://doi.org/10.1007/s11156-024-01261-9
Gharakhani, M. (2020). Examining the Role of Risk Appetite in Implementing Enterprise Risk Management. Tehran.
Khani, S., & Sharifi, T. (2024). Examining Risk Appetite in Downstream Oil and Gas Industries.
Liang, D., Wang, M., Xu, Z., & Liu, D. (2020). Risk Appetite Dual Hesitant Fuzzy Three-Way Decisions with TODIM. Information Sciences, 507, 585-605. https://doi.org/10.1016/j.ins.2018.12.017
Luciano, E., & Rochet, J. C. (2022). The Fluctuations of Insurers' Risk Appetite. Journal of Economic Dynamics and Control, 144(104543). https://doi.org/10.1016/j.jedc.2022.104543
Mahadevan, V., Subramaniam, S., & Srivastava, V. (2026). Carbon Concentration in Bank Portfolios and Efficiency: The Role of Credit Risk and Capitalization. Journal of International Financial Markets, Institutions and Money, 109, 102327. https://doi.org/10.1016/j.intfin.2026.102327
Mahmoudzadeh, M., Keyghobadi, A. R., Nojavan, M., & Soltani, F. (2023). The Relationship Between Risk Appetite, Firm Value, and Managerial Earnings Judgment. Judgment and Decision Making in Accounting, 5(2), 139-162.
Malik, M. U. (2023). Investigating Risky Investment Decisions: The Co-Existence of Financial Know, Risk Appetite, and Planned Behaviour. Jour. Pol. Soc., 1(4), 285-294. https://doi.org/10.63067/kr0ysx96
Mio, C., Agostini, M., & Panfilo, S. (2022). Bank Risk Appetite Communication and Risk Taking: The Key Role of Integrated Reports. Risk Analysis, 42(3), 634-652. https://doi.org/10.1111/risa.13776
Mohammadi, R. (2026). Development and Validation of a Model for Evaluating the Effect of Banking Risks on the Stability of Iran's Banking System. Dynamic Management and Business Analysis, 1-18. https://www.dmbaj.com/index.php/dmba/article/view/272
Plikas, J. H., & Kenourgios, D. (2026). Renewable Energy and Bank Credit Risk: The Mediating Role of Economic Growth. Economic Modelling, 107576. https://doi.org/10.1016/j.econmod.2026.107576
Pradana, F. G., & Dipsatara, T. (2026). Utilization of Blockchain-Based Smart Contracts in Banking: A Systematic Review of Technical, Regulatory, and Systemic Risk Dimensions. Jurnal Penelitian Sains Teknologi, 2(2), 91-104. https://doi.org/10.23917/saintek.v2i2.16341
Shirali, A., & Heydari Heratmeh, M. (2026). Examining the Effect of FinTech Innovation on Risk-Taking with the Moderating Role of Banking Heterogeneity: Evidence from Iranian Banks. Computational Economics Quarterly, 4(3).
Shukanayev, D. (2026). Designing Bank-Grade Governance: Risk and Control Frameworks for the Use of Fiat-Backed Stablecoins in Treasury and Transaction Banking. Journal of payments strategy & systems, 20(1), 23-45. https://doi.org/10.69554/CNEZ2330
Ullah, S., Mufti, N. A., Qaiser Saleem, M., Hussain, A., Lodhi, R. N., & Asad, R. (2022). Identification of Factors Affecting Risk Appetite of Organizations in Selection of Mega Construction Projects. Buildings, 12(1), 2. https://doi.org/10.3390/buildings12010002
Yari, F., Mehrazin, A., Yarifard, R., & Masihabadi, A. (2021). Risk Appetite, Going-Concern Risk, Management Ability, and Accountability. Accounting and Social Interests, 11(2), 1-20.
Downloads
Published
Submitted
Revised
Accepted
Issue
Section
License
Copyright (c) 1404 Morteza Ehtesham zadeh (Author); Parviz Saeidi (Translator); Majid Ashrafi, Maryam Bokharaeian khorasani (Author)
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
