Related party exposure monitor¶


ID	`MOD-147`
System	SD06
Repo	`bank-risk-platform`
Build status	Not started
Deployed	No

Purpose¶

Continuously monitor credit exposures to related parties and alert the board and risk function when exposures approach or breach the quantitative limits set by the NZ DTA Related Party Exposures Standard and equivalent APRA requirements. The module eliminates the manual aggregation burden that makes related party monitoring error-prone, and provides a single authoritative view of related party exposure as a percentage of Tier 1 capital.

What it does¶

The module maintains a registry of persons and entities designated as related parties of the deposit taker. The compliance team manages designations through a governed interface. The registry covers directors, senior managers, their associates, entities in which they hold a material interest, and parent/subsidiary entities. Designations are linked to customer CDD profiles (MOD-010) via the risk.related_party_designations table, which holds: designation_id, customer_id, relationship_type (director / senior_manager / associate / parent / subsidiary / other), designated_by, designated_at, and valid_until. Expired designations are retained for audit history.

Exposure calculation¶

The module aggregates all on-balance-sheet credit exposures — loans, overdrafts, and guarantees — per related party counterparty, sourcing outstanding balances from the MOD-001 core ledger. Off-balance-sheet committed facilities are included at their full undrawn value, consistent with prudential exposure measurement requirements. Each aggregated counterparty total is expressed as a percentage of the current Tier 1 capital figure supplied by MOD-033. Calculations run continuously as ledger events arrive; a full reconciliation sweep also executes nightly.

Exposure data is persisted in the risk.related_party_exposures table: exposure_id, related_party_id, exposure_type (loan / overdraft / guarantee / facility), outstanding_balance, committed_undrawn, total_exposure, tier1_capital_at_calc, exposure_pct, limit_pct, headroom_pct, breach_flag, calculated_at.

Jurisdiction limits¶

The NZ DTA Related Party Exposures Standard sets per-counterparty and aggregate limits as a percentage of Tier 1 capital. Exact threshold values are configurable parameters in the platform and will be populated when the finalised standard is published by the RBNZ. For AU-licensed operations, APS 222 (Connected Lending) equivalent limits apply and are held in a parallel configuration set. The module applies the correct limit parameters based on the jurisdiction of each entity in the exposure register.

Alert thresholds and notifications¶

Warning and breach thresholds are configurable. The default configuration raises a warning alert at 80% of the applicable limit and a breach alert at 100%. Warning alerts are routed to the Chief Risk Officer and CFO. Breach alerts are escalated to those recipients plus the Board Risk Committee chair. All alerts are recorded as immutable entries via MOD-048 before dispatch.

Dashboard¶

A real-time related party exposure dashboard is available to users holding the risk_officer or board_risk platform role. The dashboard shows all designated related parties, their current aggregate exposure amount, applicable limit, headroom in dollar and percentage terms, and a 90-day trend sparkline. Filters by relationship type and jurisdiction are available. Breach rows are highlighted; any row above the warning threshold is flagged amber.

Quarterly board report extract¶

The module generates a formatted PDF extract of the full related party exposure register suitable for inclusion in the board risk report. The extract is produced on a scheduled basis aligned to the board reporting calendar and shows the position at the reporting date, comparative figures for the prior quarter, and any breaches or near-misses that occurred during the period.

Compliance reason¶

The RBNZ DTA Related Party Exposures Standard is a prudential standard under the Deposit Takers Act 2023. Breaching per-counterparty or aggregate related party exposure limits constitutes a licence condition breach and may trigger mandatory supervisory reporting obligations. Without automated monitoring, aggregating exposures across all loan accounts, facilities, and guarantees for every designated related party requires manual reconciliation that is prone to omission — particularly where a related party holds multiple products or where a new designation is added mid-cycle. The module makes breach impossible to miss and retains the full calculation history available for RBNZ examination.

Commercial reason¶

Related party lending failures have been a leading cause of bank collapses in New Zealand and internationally. Automated monitoring protects the institution from inadvertent breaches by ensuring that no new credit to a related party is advanced without a clear view of the post-advance exposure percentage. The real-time headroom figure gives the credit team a definitive, auditable answer to whether additional credit to a related party counterparty can be extended at any given moment, removing reliance on ad hoc spreadsheet checks.

Module dependencies¶

Depends on¶

Module	Title	Required?	Contract	Reason
MOD-033	RWA & capital ratio engine	Required	—	Tier 1 capital ratio from the RWA engine is the denominator for related party exposure limit calculations.
MOD-001	Double-entry posting engine	Required	—	Outstanding lending balances per counterparty are sourced from the core ledger for exposure aggregation.
MOD-010	CDD tier assignment engine	Required	—	CDD profile identifies related party status, relationship type, and UBO linkage for each customer.
MOD-048	System decision log	Required	—	All related party exposure calculations, limit breaches, and board notifications are recorded as immutable decision log entries.
MOD-079	Snowflake decision publication service	Required	—	Exposure breach decisions and board notifications are written back to Neon via the decision publication service (ADR-036). MOD-079 must be deployed before write-back can occur.
MOD-104	AWS shared infrastructure bootstrap	Required	—	MOD-104 provisions the S3 Iceberg bucket (Snowflake external tables), KMS key, and bank-risk-platform EventBridge bus ARN. Required before this module can be deployed.
MOD-102	Snowflake account configuration & governance	Required	—	Snowflake account, BANK_{ENV}_RISK database, BANK_DBT_ROLE, and warehouse must exist before this module can create its schema or run dbt models.

Required by¶

Module	Title	As	Contract
MOD-150	Risk management platform	Hard dependency	—

Policies satisfied¶

Policy	Title	Mode	How
GOV-009	Related Party Transactions Policy	`CALC`	Related party credit exposures are calculated continuously as a percentage of Tier 1 capital and compared against regulatory limits — no manual aggregation required.
GOV-009	Related Party Transactions Policy	`ALERT`	Alerts are generated when any single related party exposure approaches or breaches the DTA limit, giving the board time to act before a breach occurs.
CRE-005	Concentration Risk Policy	`ALERT`	Related party concentrations are included in the concentration risk monitoring dashboard alongside other large-exposure alerts.

Capabilities satisfied¶

(No capabilities mapped)

Part of SD06 — Snowflake Analytics & Risk Platform Compiled 2026-05-22 from source/entities/modules/MOD-147.yaml