Annual Report 2012 - Bank Sarasin

Operational risks and reputation risks
Operational risks are defined as the risk
of losses that arise through the
inadequacy or failure of internal
procedures, people or systems, or as a
consequence of external events. This
definition includes all legal and
supervisory risks, but excludes strategic
risks and risks to the bank’s reputation.
Bank Sarasin manages its operational
risks on the basis of a consistent
groupwide framework that not only
satisfies the requirements of the Swiss
Financial Market Supervisory Authority
(FINMA).
The underlying processes for monitoring
operational risks are based on directives
and on reporting at the appropriate level.
A centralised database is used to collect
and analyse loss events across the entire
group. The regular measurement,
reporting and assessment of segmentspecific
risk indicators enables potential
hazards to be detected well in advance. A
regular self-assessment is performed
involving representatives from specialist
units and risk experts in order to identify
and catalogue the underlying risks and
inadequacies of a specific area, and these
are then repeatedly reviewed.
Committee. This is embedded in the
Bank's existing structures and processes
in the area of risk management.
Litigation risk
In the course of their normal business,
Bank Sarasin & Co. Ltd and individual
companies in the Group are involved in
various types of litigation. The Group
makes provisions for such contingencies if
the bank and its legal advisers consider
that the Group is likely to have to make
payments and if the amount of those
payments can be estimated. All provisions
for risks connected with litigation are
included in the Group balance sheet under
“other provisions”.
As regards any further claims against the
Sarasin Group of which the competent
bodies within the Bank are aware (and for
which, in accordance with the principles
outlined above, no provision has been
made), the executive management and its
legal advisers consider that such claims
are without merit, can be successfully
defended or will not have a significant
impact on the Group’s financial situation
or operating results.
Reputation risks
For Bank Sarasin, reputation is essentially
the stakeholders' (clients, counterparties,
shareholders, investors and regulators)
perception of the Bank's public standing,
as well as its professionalism, integrity
and reliability. Accordingly, reputation risk
can be defined as the existing or potential
threat of negative commercial impacts on
the Bank created by the relevant
stakeholders' negative perception of the
Bank.
In order to identify potential reputation
risks at an early stage and take any
countermeasures necessary, the Risk
Office has defined a management and
control process for reputation risks which
has been approved by the Executive
Bank Sarasin & Co. Ltd, Annual Report 2012 | 68