A4 für Copyshop GB.indd - Bayerische Landesbank

118 Report on the Bank and the Group
Summary and outlook
Efforts undertaken during 2004 and previous years in the area of risk controlling and
management also contributed to the Bank’s overall positive performance in the year
under review. Thanks to these efforts, risks threatening the portfolio, or jeopardising
performance at BayernLB, were identified in good time, assessed and controlled.
Other milestones were:
• optimisation of structural and procedural organisation for credit transactions, partic-
ularly the processes for handling problem loans
• enhancement of the risk policy and strategy (e.g. by the introduction of a loan loss
provisioning policy)
• improvement of the methods and tools used for risk analysis and assessment, partic-
ularly balance sheet analysis software and rating methods
• enhancement of the supervisory risk capacity calculation (in accordance with Princi-
ple I) by the introduction of economic controlling (using Value at Risk)
• reduction of risk clusters and concentration risks
BayernLB considers risk controlling and management, both internally at the Bank and
in cooperation with the savings banks associations, to be a crucial competitive factor
in the long term. Both the economic demands of competition and supervisory provi-
sions will necessitate the further strengthening and refinement of risk controlling and
management procedures over the next years.
The fine-tuned assessment and adequate pricing of counterparty risks will remain the
main tasks. In addition, economic capital controlling will be pursued for all measurable
risks and at all controlling levels. Early detection of risks, coupled with targeted risk
reduction measures, will be developed further. The regulations and instruments neces-
sary for these objectives are being developed on an ongoing basis.