Full integrated annual report - African Bank - Investoreports

Risk management report
This is a condensed version of risk report. For more detailed information refer to our web-based risk
report at: http://africanbank.investoreports.com/africanbank_ar_2011/risk/
The ABIL risk management philosophy and culture
The management of risk is a fundamental element of the group’s strategic
business execution although in recent times local and international events
have increased the expectations for the management of risk in the group.
The group risk management approach is an approved enterprise-wide
risk management methodology and philosophy to ensure adequate and
effective risk management. In addition, the methodology also provides
regulatory principles that, together with the risk management approach,
will continue to ensure optimum return on shareholders’ equity through
the application of the following core principles:
Clear assignment of responsibilities and accountabilities;
Common enterprise-wide risk management framework and process;
The identifi cation of uncertain future events that may infl uence the
achievement of business plans and strategic objectives; and
The integration of risk management activities within the company
and across its value chains.
Sustainable high-quality shareholder returns can only be derived by
accepting a certain measure of risk. In light of the understanding of
risk management by the group, the board has strategically accepted
a higher risk appetite for credit risk than most other credit lenders. This
increased risk appetite is informed by a stable, effective and effi cient risk
management philosophy and framework within the group. ABIL views
risks as an inherent part of running a successful business, i.e. risks are
not only mitigated but are also analysed and investigated for potential
opportunities. This approach provides the direct correlation and linkage
between risk management and maximising shareholder value.
The group applies a logical and systematic methodology to identify,
analyse, assess, mitigate and monitor all known risks. The critical
success factor is the alignment of the key fundamentals of governance,
business objectives, stakeholders, ethics, policies, standards, strategies
and compliance.
The risk management process is continuous, with well-defi ned and
entrenched procedures that support improved decision-making by
contributing a greater insight into risks and their potential impact.
One of the objectives of the risk management philosophy is to ensure
that mitigating strategies are geared to deliver reliable and timely risk
management information.
ABIL’s approach to risk accepts and embraces risk management as a
core competency that allows the business to optimise risk taking through
objectivity and transparency that will ensure effective and effi cient risk
pricing and optimised returns within a chosen risk appetite.
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