2005 - Asianbanks.net

Liquidity Risk Management
Liquidity risk involves the Bank’s inability to meet its financial obligations upon maturity due to its inability to obtain sufficient cash, or to
liquidate assets at reasonable prices. Recognizing the possible damage of such risk, the Bank has appointed a Committee on Financial Policy and
Liquidity Management (Money Desk) to keep a close watch on the financial and liquidity management of the Bank within the risk management
guideline specified by the Assets and Liabilities Management Committee. The Treasury Department manages daily liquidity by considering the daily
cash demand, the liquidity above the mandatory liquidity reserve of 6% required by the Bank of Thailand, the structure of deposits and withdrawals,
customers’ behavior, competitive position, economic conditions within and outside the country, and the expected return to the Bank. It also
considers the maximum cumulative outflow during normal condition and during crisis by comparing the Bank’s cash position, the credit lines granted
but unused at other banks, and the reserve level. It also prepares a contingency plan in the case of the Bank running into a liquidity problem situation.
The Risk Management Department estimates the cash flow by considering the daily demand for cash, demand for cash within 12 month and within 5
year, including cash need projection based on assumptions of emergency and customers’ behavior to plan cash management, liquidity position and
reserve position for a monthly presentation to the Assets and Liabilities Management Committee.
Operational Risk Management
Operational risk refers to the possible damage the Bank may sustain as a result of the lack of efficient supervision and control in the
management of work processes, operations systems and information technology systems, or the result of external factors beyond the Bank’s control.
The Bank is aware of the importance of operational risk management and has developed a system to manage operational risks. The Bank has
implemented the policy of bringing operational risks management and control up to international standards and in line with good governance
principle. A department has been set up to be in charge of operational risks management at both policy and operational levels. An IT system has
been developed to include any data loss in the calculation of minimum capital fund in line with the requirements of Basel II. Each business unit is
required to follow the Risk Self Assessment method in evaluating its operational risks periodically. In addition, there is a management structure to
facilitate the operational risk management, such as clear separation of responsibilities, check and balance of power, in accordance with the principles
of good internal audit. The Compliance and Audit Group, an important mechanism to help control and prevent any possible damages, is independent
and reports directly to the Audit Committee.
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