Beyond Bhotekoshi: A Wider Warning

The devastating Bhotekoshi flood has once again exposed the growing risks posed by Himalayan rivers, glaciers and glacial lakes. For communities living along these rivers, discussions about glacial avalanches and glacial lake outburst floods are not academic exercises. They are matters of life, death and survival. The disaster should therefore not be treated as an isolated event. It should serve as a warning that Nepal needs to strengthen its systems for identifying, monitoring and mitigating emerging risks before they turn into disasters. There is a useful lesson in the approach recently taken by Nepal Rastra Bank (NRB). The central bank has revised its risk-management framework for banks and financial institutions (BFIs), requiring them to account not only for conventional risks such as credit, liquidity, market and interest-rate risks, but also for emerging threats linked to climate change, artificial intelligence, digitalisation, cybersecurity and operational resilience. Through its new Risk Management Guidelines, the NRB has asked BFIs to adopt comprehensive risk-management programmes suited to their size, complexity and operating environment. It has also clarified the responsibilities of boards, senior management, risk-management committees and internal audit systems in managing different categories of risk. The underlying message is clear: risk management cannot remain a compliance exercise; it must become an integral part of institutional decision-making and strategy.