Annual Report 2012 - Raiffeisen Bank Kosovo JSC

4.5 Operational risk
The primary responsibility for the development and implementation of controls to address operational risk is assigned
to senior management within each business unit. This responsibility is supported by the development of overall Bank
standards for the management of operational risk in the following areas:
to address the risks identified
Compliance with Bank standards is supported by a programme of periodic reviews undertaken by Internal Audit.
The results of Internal Audit reviews are discussed with the management of the business unit to which they relate, with
summaries submitted to the Audit Committee and senior management of the Bank.
4.6 Capital Risk Management.
The Bank manages its capital to ensure that it will be able to continue as a going concern while maximising the return to
shareholders through the optimisation of the debt and equity balance. The Bank’s overall strategy remains unchanged
from previous year. The capital structure of the Bank consists of debt, which includes borrowings, and equity attributable
to equity holders, comprising issued capital and retained earnings.
Regulatory capital
equal to 15 per cent (fifteen percent) of the relevant indicator. The relevant indicator is the average over three years of
the sum of net interest income and net non-interest income.
Capital Adequacy Ratio
The Capital Adequacy Ratio is the proportion of the regulatory capital to risk weighted assets, off balance-sheet items
and other risks, expressed as a percentage. The minimum required Capital Adequacy Ratio is 8 per cent for Tier 1
capital and 12 per cent for total own funds.
Risk-Weighted Assets (RWAs)
Assets are weighted according to broad categories of national risk, being assigned a risk weighting according to the
amount of capital deemed to be necessary to support them. Six categories of risk weights (0 per cent, 20 per cent,
50 per cent, 75 per cent, 100 per cent, 150 per cent) are applied; for example cash and money market instruments
have a zero risk weighting which means that no capital is required to support the holding of these assets. Property and
equipment carries a 100 per cent risk weighting, meaning that it must be supported by capital (Tier 1) equal to 8 per
cent of the carrying amount.
Off-balance-sheet credit related commitments are taken into account. The amounts are then weighted for risk using the
same percentages as for on-balance-sheet assets.
53
31 December 31 December
2012 2011
Total risk weighted assets 419,530 436,091
Total risk weighted off balance exposures 15,446 17,780
Total risk weighted assets for operational risk 55,476 N/A
Total 490,452 453,871
Regulatory capital (Total Capital) 68,591 92,161
Capital adequacy ratio (Total Capital) 13.99% 20.31%
Addresses Glossary Financial Statements Segment Reports Overview Macroeconomic Environment RBI Vision and Mission Management Board Introduction