The Case Study - Seylan Bank

Seylan Bank PLC Annual Report 2009 63Risk Management reportOur new Path…Seylan Bank views Risk Management as animportant element of the management control andbusiness of the Bank. A renewed and re-emphasisedapproach is being taken under the new board formanaging risks better.We have recognised that risk is the existenceof a range of possible outcomes where suchoutcomes and the potential range can be reasonablyestimated. Where such estimation becomes difficultthe situation is one of uncertainty. A Bank is facedwith both uncertainty and risk. While attempting toavoid uncertainty as a business outcome, the Bankdoes accept risk within acceptable norms and limits,within our strategy set towards our new path.We have categorised the key risks faced by usinto three main risks viz. Credit Risk, Market Riskand Operational Risk. Apart from these three risks,several other risks such as liquidity risk, reputationrisk, solvency risk and event risk, are some of thekey risks faced by the Bank.The Responsibilities for Managing RiskThe board of directors assumes overallresponsibility for managing risks in the Bank.For this purpose, the board has determined theorganisational structure that should prevail toensure a sound and adequate risk managementframework. Further, the board has designatedKey Management Personnel to manage risk andidentify their areas of responsibilities. The boardalso reviews on a regular basis the risk exposuresof the Bank and specifies and approves policieswith regard to risk measurement and control.The board delegates some of its duties tovarious risk management committees and officialsof the Bank.The Risk Management Process andthe Integrated Risk ManagementCommitteeThe following is a schematic presentation of themultifaceted framework of Risk Management thatencompasses three areas of controls viz. FinancialControl, Risk Management Control and Internal Audit.