Annual Report - Ahli United Bank

ahliunited.com

Annual Report - Ahli United Bank

Group Business& Risk Review (Contd.)e-learning development and certification programs, thereby maximising training and development opportunities available to staff whilstsimultaneously achieving substantial reduction in training costs.RISK MANAGEMENTRisk management involves the identification, analysis, evaluation, acceptance and management of all financial and non-financial risks thatcould have a negative impact on the Group’s performance and reputation.The major risks associated with AUB’s business are credit risk, market risk which includes foreign exchange, interest rate and equity pricerisk, liquidity risk, operational risk and reputational risk.AUB’s risk management policies have been developed to:• identify and analyse these risks,• set appropriate risk limits and controls,• monitor the risks and adherence to limits.The risk management function is not responsible for eliminating risks that are embedded in any banking business, but aims to effectivelymanage these risks with the objective of earning competitive returns over the degree of assumed risk. Risk is financially evaluated as thepotential impact on income and asset value, taking into consideration changes in political, economic and market conditions, and thecreditworthiness of the Bank’s clients.The risk management function relies on the competence, experience and dedication of its professional staff, sound risk managementpolicies and procedures, and ongoing investment in technology and training.The Board of Directors and senior management are involved in the establishment of all risk processes and the periodic oversight andguidance of the risk management function. The Board of Directors reviews and approves at least annually the Bank’s key Risk Managementpolicies. The Risk Management processes are subject to additional scrutiny by independent internal and external auditors and the Bank’sregulators which help further strengthen the risk management practices.The risk management control process is based on detailed policies and procedures that encompass:25201050RETURN ON AVERAGE EQUITY18.0 %15.1 %13.5 %11.4 %9.6 %2005 2006 2007 2008 2009• business line accountability for all risks taken. Each business line is responsiblefor developing a plan that includes adequate risk/return parameters, as well asrisk acceptance criteria;• a credit function that understands, monitors and independently controls eachcredit relationship ensuring that the appropriate approval authorities areobtained and a uniform risk management standard including risk ratings havebeen correctly assigned to each and every credit relationship;• product and business policies, which are clearly understood, monitored and are inagreement with the overall credit policy and the Board approved risk framework;• the ongoing assessment of portfolio credit risk and approval of new products;and• an integrated limits structure that permits management to control exposures andmonitor the assumption of risk against predetermined approved tolerances. TheBoard of Directors establishes global limits for each major type of risk which aresub allocated to individual business units.36 AUB Annual Report 2009

More magazines by this user
Similar magazines