Annual Report 2012 - National Savings Bank

132ASSESSING AND MANAGING OUR RISK FACTORSRISK MANAGEMENTThe status of the risk events encountered under the Basel II-Loss/Risk Events for the year 2012 is given below.Type of Risk/ Loss Event Nature of reported loss events RemarksInternal FraudsFraudulent Withdrawals, Intentional Accounting Impact and the severity are insignicant.Irregularities, Cash Frauds, Manipulations of Actions are taken to improve the internal controls.Accounts, Intentional Cash ShortagesExternal Frauds Third party fraudulent withdrawals, card frauds Impact and the severity are insignicant.Employment Practices andWork Place SafetyDisciplinary InquiriesDisciplinary Inquires and LT cases have beenmonitored and no nancial risk or unethical practicesencountered.Court cases are been monitored and no new legalclaims were made.Client, Product and Business NILPracticesDamages to Physical Assets Damages to Physical Assets Covered under Insurance PoliciesIrrecoverable amount is insignicant.Business Disruption and ATM Failures, Failures of System modules, Impact and the severity are insignicant andSystem FailuresPower outage, Telecommunication outage, monitored closely.Execution, Delivery andProcess ManagementHardware FailuresAccounting Irregularities, Counter transactionCash shortages/excess, ATM cash shortages,Losses due to ATM errors, card losses, Misposting of entries, Non compliance of executionof trading transactionSignicant reputational loss was occurred due to 'TheFinance Transaction' though the policies and practicesare in place.The impact and the severity of other events areinsignicant.Internal Control AssessmentsPeriodic assessments on adequacy andeffectiveness of the Bank’s internalcontrols are a part of the operationalrisk management process to ensurethat systems have adequate controlsthat would minimise the operationalrisk. RMD has already commenced theprocess of reviewing the strength ofinternal controls of existing operationsby mapping the ow charts of currentprocesses.The process and controls of theoperations of deposit collection viapoint of sales device, the credit process,card center operations and, internalcontrols of asset management functionhave been reviewed and improvementsto be made to the process andadditional controls have been identiedand introduced in consultation with theInternal Audit Division. The operationallevel requirements which have arisenfrom the risk register and internalcontrol examination ndings arecommunicated to senior managementthrough risk committees such asERMC, IRMC and the Board. Thisincludes the actions such as reviewingof the existing process/procedureand/or introducing of new systems,procedures and processes. This willlead to establishing a Risk and ControlSelf Assessment (RCSA) process underoperational risk management.NATIONAL SAVINGS BANK . ANNUAL REPORT 2012