Risk Management - Public Bank | PBeBank.com

Annual Report 2003
www.publicbank.com.my
CORPORATE GOVERNANCE
Risk Management
Treasury Dealing Room’s performance with the availability of online real-time
information for better decision making and improve operational efficiency via an
integrated and straight-through processing system.
Credit Risk Management Information System
A working group has been set up to enhance the credit risk management information
system to facilitate more efficient and effective review of the credit quality of loans,
assist in rating of credits, assess risk-return of credits in respect of pricing and default
risk involved, and simulate potential losses from deteriorating credits due to adverse
changes in the economy and under stressed conditions. In addition, this system would
have the financial analysis capabilities to perform risk modeling and provide financial
advisory services to small- and medium-size enterprises. The enhancement to the credit
risk management information system will also take into consideration compliance with
the requirements of the new Basel Capital Accord (“Basel II”).
Integrated Cost Accounting System
A working group has been set up to enhance the integrated cost accounting system by
using standard cost allocation techniques and motion study on banking activities which
will serve as the foundation to support profitability analysis, cost measurement, channel
management and customer relationship management. This system will enable Public
Bank to perform standard costing to determine the profitability of products, customers,
services and delivery channels as well as performance measurement of business units.
Automation of Self-Compliance Checklist
The Self-Compliance Checklist, a self-check audit programme conducted periodically by
the business units has been automated and is in the process of being implemented. The
system creates an online platform for documentation of the self-audit and review by
business units, and the submission and reporting of such self-audit reviews by business
units to central monitoring functions. This enhanced self-assessment tool improves
operational efficiency and facilitates early detection of irregularities and weaknesses in
the business units thus allowing prompt administration of remedial measures.
OVERALL RISK MANAGEMENT FRAMEWORK
Public Bank believes that there must be clear accountability and responsibility for the risk
management process. The current risk management framework within Public Bank is
based on the following 6 broad principles which outline the principal risk management
and control responsibilities as shown in the structure chart on the following page:
1. The Board is ultimately responsible for the management of risks. The Board
through the Risk Management Committee maintains overall responsibility for risk
oversight within Public Bank.
2. The Risk Management Committee is responsible for the risk oversight for the
major areas of risk covering credit risk, operational risk, market risk and liquidity
risk. The Risk Management Committee is responsible for the establishment of risk
policies.
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