2011 Annual Report - BDO

December 31, 2010Loans – Trading andCash and Cash excluding Other InvestmentEquivalents Receivables SecuritiesConcentration by sector:Financial intermediaries P 8,215,051,995 P 21,119,122 P 5,067,123,626Government - - 10,000,249,335Manufacturing (various industries) - 1,742,846,314 3,063,485,912Real estate, renting andbusiness activities - 25,173,799 206,235,233Agriculture, fishing and forestry - 803,792,889 -Other community, socialand personal activities - 193,981,117 525,259,614P 8,215,051,995 P 2,786,913,241 P 18,862,353,720Concentration by location:Philippines P 7,147,113,613 P 2,786,913,241 P 17,636,966,921Other 1,067,938,382 - 1,225,386,79P 8,215,051,995 P 2,786,913,241 P 18,862,353,7202.15.05 Equity RiskEquity risk is the risk that the fair values of equity investments will decrease as a result ofchanges in the levels of equity indices and the value of individual stocks (whether traded ornot). The Bank has no significant equity risk.2.16 Operational RiskOperational risk is the risk of loss due to the Bank’s:• failure to comply with defined bank operational procedures;• inability to address fraud committed internally or externally;• inability to handle system failures; and• inability to cope with the impact of external events.The Bank manages its operational risks by having policies to minimize its expected losses,allocating capital for the unexpected losses, and having insurance and/or a business continuityplan to prepare for catastrophic losses.www.bdo.com.ph 69