Bahamas - FirstCaribbean International Bank

Martin Griffiths
Chief Risk Officer
Risk Management
prices. It arises in trading activities as well as in the natural course of
wholesale and retail business, for example in the advancing of fixed rate
loans to customers.
The principal aims of FirstCaribbean’s market risk management activities are
to limit the adverse impact of interest rate and exchange rate movements on
profitability and shareholder value and to enhance earnings within defined
limits. There is no single risk measure that captures all aspects of market
risk. FirstCaribbean uses several risk measures including Value at Risk (‘VaR’),
sensitivity measures and stress testing. Market risks are managed by setting
limits based upon the specific markets and products that FirstCaribbean are
engaged as well as the amount of the Group’s capital that can be put at risk.
These measurement methodologies utilise international best practice.
There is a centralised, dedicated risk management team charged with the
responsibility to ensure that the risk measurement methodologies used are
appropriate for the risks being taken and that appropriate measurement,
monitoring and control procedures are in place.
The Risk & Conduct Review Committee reviews market risk strategy and
overall limits. It approves key policies and oversees the measurement,
monitoring and control regime.
Compliance Risk
The Compliance team within the Risk function is tasked with identifying
the compliance obligations in each Country where the bank operates and
provides advice and guidance to the business line on compliance risks.
Primary responsibility for compliance lies with territorial line management.
Compliance risks are associated with failures to comply with laws, regulations,
rules, and the codes of ethics and conduct applicable to our business
activities. Such failures can give rise to legal or regulatory sanctions, material
financial loss, or a loss of reputation to the bank.
Compliance supports management in the development of appropriate
policies and procedures to ensure compliance with all legislation and
internal our own code of conduct and ethics. The function regularly makes
Compliance visits to assess conformance with group standards.
The Compliance function assesses and monitors the compliance risks faced
by our businesses, and independently reports to the Audit & Governance
Committee on the compliance framework operating across the Group, and
on line management’s attention to compliance issues.
Operational Risk
FirstCaribbean defines operational risk as the exposure to loss from failed
or inadequate internal processes, people and systems or from external
events. It is the risk of direct or indirect loss, or damaged reputation, due
to deficiencies or errors in the Group’s internal operations which may be
attributable to fraud, human error, processes or technology failure, or due
to external events.
Operational risks are inherent in all activities within the bank, including in
outsourced activities and in all interaction with external parties. Strong internal
control and quality management, consisting of a fraud framework, leadership
and trained staff, is the key to successful operational risk management.
Each strategic business unit is primarily responsible for managing their own
operational risks. Risk management develops and maintains the framework
for identifying, monitoring and controlling operational risks and supports
the business in implementing the framework and raising awareness of
operational risks. The team sets policy, monitors compliance and promotes
best practice.
An element of FirstCaribbean’s operational risk management framework is
ongoing monitoring through self-assessment of control deficiencies and
weaknesses, the tracking of incidents and loss events to ensure that, once
44