From my senior roles in treasury and risk at Stanbic Bank Ghana, where I managed exposures during the 2022-2023 DDEP (a sovereign debt restructuring amplifying country risk via default fears), country risk encompasses political/economic instability, while sovereign risk focuses on government default probabilities. Under BoG’s Risk Management Guidelines and Basel II/III, the Risk Committee (per Corporate Governance Directive Section 67) must institutionalize measures for oversight, especially post-Ghana’s debt distress, to protect capital and meet board expectations for resilience.

Five critical measures:

1. Develop a Robust Risk Assessment Framework (5 Marks): Institutionalize quantitative models (e.g., using ratings from Moody’s or Fitch for Ghana’s CAA1 rating post-DDEP) and qualitative analyses for exposure limits. Critically, this prevents over-concentration, as in Baring Bank’s rogue trading amplified by unmonitored risks.
2. Set and Monitor Exposure Limits and Diversification (5 Marks): Establish country-specific caps (e.g., 20% of portfolio in sovereign bonds) with real-time monitoring via EWRM. In Ghana, post-2017 cleanup, banks like Ecobank diversified to Eurobonds, mitigating sovereign defaults.
3. Integrate Stress Testing and Scenario Planning (5 Marks): Conduct regular tests simulating events like currency devaluation (e.g., Cedi’s 50% drop in 2022). Critically, this aligns with BoG’s CRD, enhancing capital planning.
4. Enhance Reporting and Collaboration with Audit Committee (5 Marks): Quarterly reports on risk metrics, joint reviews for assurance. Example: Access Bank Ghana’s integrated reports post-DDEP ensured accountability.
5. Implement Mitigation Strategies and Contingencies (5 Marks): Use hedging (e.g., credit default swaps) and insurance, with BCM plans per BoG Directive. Critically, this addresses global examples like Parmalat, preventing cascading failures.

These measures satisfy board expectations, ensuring compliance and ethical risk management.