confidence - Investing In Africa

Management Discussions & AnalysisOperation Review (cont’d)Risk Management PracticesEnterprise-wide Risk Management(ERM)ERM is a coordinated and focusedapproach to identify and manage therisks of the Group. This process enablesthe Bank to better manage theuncertainties that could have apositive or negative impact on theoperating results of the Group andplan its strategies accordingly, takinginto account the acceptable risk/returntrade-offs, the risk appetite of theGroup and the available capital.The Board is ultimately responsible forthe risk management process across theenterprise and approves the Group riskstrategy, risk policies and prudentiallimits within which operations have tobe carried out. The Board has also setup the Risk Committee to which it hasdelegated some of its functions and itsmain responsibility to monitor andensure the effectiveness of the riskmanagement process. The formulationand implementation of the policies aredelegated to management and theRisk Management Team, a centralizedunit independent of sales andoperations which ensures complianceto the internal, legal and regulatorynorms, recommends changes to the setrisk parameters and reports to theForums/Committees/Board on credit,market and operational risk issues. TheRisk Management Unit also developsmethodologies to identify, measure,mitigate and monitor the risks faced bythe Bank. The ultimate responsibility forthe management of risks rests with theRisk Committee and the Board.“The Bank has established a Code of Ethics and Business Conduct, besides a Policy on Fit and ProperPerson Criteria to ensure that staff are knowledgeable and capable to assist customers with theirrequirements. Adoption of internationally accepted business practices ensures that the customer feelsconfident that his/her interests are being safeguarded”In line with regulatory guidelines, Board reviews the policy of riskmanagement practices annually and approves them ahead of the start of thefinancial year.Chart 2 - Risk Management FrameworkBOARD OF DIRECTORS• Approves business strategy, objectives, plans and risk management practicesRISK COMMITTEE• Determines risk tolerance and appetite.• Reviews significant risks and effectiveness of processes• Sets management responsibilitiesMANAGEMENT FORUMSPortfolio Asset and Liability Operational RiskManagement Management ManagementForum Forum Forum• Formulates and implements the business strategy and risk policies• Recommends changes to policies, processes andparameters for approvalRISK MANAGEMENT UNITPortfolio Market Risk Operational RiskManagement Team Management Team Management Team• Plans, guides and reports on the accumulation of assets• Monitors prudential limits and risk profile of the Bank• Ensures compliance with internal and regulatory norms79