Bahamas - FirstCaribbean International Bank

Martin Griffiths
Chief Risk Officer
Risk Management
Commentary on overall Group results
Risk Management Ethos
Risk-taking is inherent in banking and FirstCaribbean assumes a variety of
risks in its ordinary business activities. These include credit risk, market risk,
compliance risk and operational risk. The Board and Management view the
Bank as having a prudent risk profile, with a prudent approach to lending.
FirstCaribbean has a limited appetite for market risk and has implemented
detailed procedures to manage both Compliance and Operational risk.
Risk and Control is firmly embedded in our corporate culture as a core
competence and it provides a sound foundation for sustained growth in
earnings and shareholder value.
Risk Management’s function is to ensure that FirstCaribbean continues to take
risk in a controlled way in order to enhance value and exploit opportunity.
The Bank’s risk management policies are designed to identify and analyse
these risks, to set appropriate risk limits, and to monitor and enhance its
risk management practices to reflect changes in markets, products and
evolving best practice, drawing on international and regional expertise.
Risk is subject to independent oversight and analysis by six centrally based
risk management teams reporting to the Chief Risk Officer: Credit Risk,
Market Risk, Receivables Management, Compliance, Risk & Controls, and
Operational Risk.
Primary responsibility for risk management lies with the line management
in our various businesses. We have embedded a risk and control governance
structure within each Strategic Business Unit. Representatives from the risk
teams meet regularly with the senior leadership of each business unit in
order to identify risks in the business and propose and/or track remediation.
Through this process, the business has taken ownership of its risks and
responsibility for remediation through solutions delivered in partnership
with the specialist expertise in the risk management teams. This approach
is supported by enterprise reporting, enabling risks to be identified in a
transparent and rational manner, thus facilitating speedy recognition,
resolution and enhanced accountability. It similarly greatly enhances the
ability of the organisation to set and monitor to risk tolerance and to allow
these to play their proper role in determining and delivering on the strategy
of the Bank.
Credit Risk
Credit risk is the risk a customer or counterparty will be unable or unwilling
to meet in a commitment that it has entered into, and the pledged security
does not cover the customer’s liabilities in the event of a default. The credit
risks in FirstCaribbean arise primarily from lending activities to customers but
also occur with bonds, guarantees, and securities.
Credit risk is managed and controlled on the basis of established credit
processes and within a framework of credit policy and delegated authorities
based on skill, experience and, with Corporate clients, by risk grade.
Credit grading, scoring and monitoring systems accommodate the early
identification and management of deterioration in loan quality. The credit
management process is underpinned by an independent system of credit
review by Credit Conformance teams. Delinquent facilities are subject to
separate and additional oversight by our Receivables Management teams.
Classification is automated and operates strictly in line with regulatory and
accounting standards. Credit provisions are independently calculated in
accordance with International Financial Reporting Standards for statutory
reporting, and in accordance with the Financial Institutions Act to meet
regulatory requirements by the central Risk & Control team, and is regularly
reviewed by the Bank’s auditors.
The Board determines the credit authority for the Credit Committee and
approves the Group’s key credit policies.
Market Risk
Market risk is the measurement of potential loss arising from adverse
movements in interest rates, foreign exchange rates, equity and commodity
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