Risk Management - Public Bank | PBeBank.com

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Annual Report 2003 www.publicbank.com.my CORPORATE GOVERNANCE Risk Management Type of Risk Operational Risk Risk Control & Monitoring • Experienced key operational personnel appointed to the ORMC. • Business risk units are responsible for operating within the operational risk management framework. • Control and support units, which are independent of the business risk units, track risk levels to ensure business risk units operate within the established policies, procedures, limits and thresholds set for key risk indicators. • Comprehensive system of internal controls based on the principle of segregation of duties, independent checks, segmented system access control and multi-tier authorisation processes. • Systems and procedures to monitor transactions and positions. • Comprehensive and up-to-date documentation of processes and procedures. • Documented and regularly tested key back-up procedures and contingency plans, including disaster recovery and business resumption plans. • Overall assurance on the adequacy and reliability of the operational risk management systems by Internal Audit Division. • Post audit review and follow-up by Operations Control Department. Market Risk Risk Identification & Measurement • Mark-to-market technique is used to revalue marketable securities, equities and foreign currency positions. Risk Control & Monitoring • Mark-to-market of trading positions are compared against pre-determined market risk limits. • The market risk limits are set after taking into consideration the risk appetite of the Bank, and the risk-return relationship. • Trading positions and limits are regularly reported to management. Foreign Currency Risk Risk Identification & Measurement • Mark-to-market of foreign exchange positions. • Review of foreign currency exchange exposure for overseas branches. Risk Control & Monitoring • Foreign exchange open positions are monitored against pre-determined position limits. • Mark-to-market valuations are monitored against pre-determined cut-loss limits and regularly reported to management. publicbank • 44
publicbank • 45 Type of Risk Risk Identification & Measurement Risk Control & Monitoring Interest Rate Risk • Interest rate risk measured through the interest rate sensitivity gap analysis by currency. • Simulations under different interest rate environments and estimation of impact on net interest income. • Impact on economic value of changes in interest rate measured by durationweighted methodology. • Mark-to-market valuations of investment and dealing securities. • Regular reviews of the interest rate outlook, vulnerability of net interest income to movements in interest rates and development of strategies to mitigate interest rate risk. • Changes in market value of investment and dealing securities due to interest rate movements are monitored and reported to the ALCO and management. • Impact on net interest income from unfavorable interest rate movements monitored against risk tolerance limits. Equity Risk Risk Identification & Measurement Risk Control & Monitoring • Daily mark-to-market valuations of the share investment portfolio. • Mark-to-market valuations are monitored against pre-determined cut-loss limit, and reported to the Share Investment Committee. Liquidity Risk Risk Identification & Measurement Risk Control & Monitoring • Application of Bank Negara Malaysia’s (“BNM”) New Liquidity Framework. • Internal liquidity risk management limits are set. • Compliance with BNM’s New Liquidity Framework and internal liquidity risk management policy are monitored and reported to the ALCO. • Liquidity contingency funding plans in place and documented. • Monitoring of the Bank’s funding structure.
Page 1 and 2: publicbank • 35 Risk Management I
Page 3 and 4: publicbank • 37 3. The Credit Ris
Page 5 and 6: publicbank • 39 INDEPENDENT RISK
Page 7 and 8: publicbank • 41 RISK MANAGEMENT P
Page 9: publicbank • 43 The key risk mana
Page 13 and 14: publicbank • 47 The Financial Act
Page 15 and 16: publicbank • 49 Awards Year Bank-
Page 17 and 18: publicbank • 51 Y.Bhg. Datuk Tay
Page 19 and 20: publicbank • 53 Y.Bhg. Tan Sri Da
Page 21 and 22: publicbank • 55 Y.Bhg. Dato’ Le
Page 23 and 24: publicbank • 57 He qualified as a
Page 25 and 26: FINDING STRENGTH IN DIVERSITY The b
Page 27 and 28: publicbank • 61 TO SHAREHOLDERS F
Page 29 and 30: publicbank • 63 Shareholders of P
Page 31 and 32: publicbank • 65 Together with on-
Page 33 and 34: publicbank • 67 ACKNOWLEDGEMENT W
Page 35 and 36: publicbank • 69 1. MEMBERSHIP AND
Page 37 and 38: publicbank • 71 f. Related Party
Page 39 and 40: STATEMENT ON INTERNAL CONTROL publi
Page 41 and 42: publicbank • 75 • There are pro
Page 43 and 44: HEADS OF DIVISION publicbank • 77
Page 45 and 46: publicbank • 79 En. Nasaruddin bi

Risk Management - Public Bank | PBeBank.com

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