Annual Report 2012 - National Savings Bank

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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
133ASSESSING AND MANAGING OUR RISK FACTORSRISK MANAGEMENTProcess/System ImprovementsAs process/system improvements,credit modules and the branch moduleswere updated to comply with the CBSLdirections and Basel II requirements.Requirements regarding KYC datacapturing and KYC monitoring,implementation of the IT modulesfor developing of a comprehensivePawning MIS and a system to facilitatethe implementation of credit scoringmodel were also introduced during theyear.Improvements towards the ITInfrastructureIn order to keep up with advancedtechnology approaches, the Bank isfocusing on the development and reviewof IT systems. Mitigation actions relatedto IT risks are taken by enhancing theInformation Security System and otherinternal development environmentswith the use of Quality Assuranceand other professional practices.Operational Risk Management processis in place for implementations of suchdevelopments or changes to the systems.Key Risk Indicators (KRI)During the year, the Risk ManagementDivision developed KRIS for Bank’soperational risks that reect risks oftechnical and non technical mattersrelated to key business areas/businesslines. Since internal loss events reportinghas become an effective source forprocess improvements, KRIS relatingto operational risk such as numberof internal frauds reported, externalfrauds reported, Operational LossEvents (beyond the CBSL threshold),Suspicious Transactions reported toFIU etc are included in the quarterlyrisk review report.Operational Loss EventsExecution, Delivery and process manegementBusiness disruption and system failureDamage of physical assetsClient products and business practicesEmployment Practices and workplace safetyExternal FraudsInternal FraudsEvent TypeThese KRIs are updated quarterlyand the trends are communicatedto operational divisions through riskmanagement committees to initiaterisk mitigating measures. OperationalRisk based on reported loss eventsare monitored by RMD and reportedto the Executive Risk ManagementCommittee (ERMC), Integrated RiskManagement Committee (IRMC) andthe Board. The loss events which exceedthe threshold as per the Regulator arereported quarterly.0 20 40 60 80 100frequency of the event as a % of total events20122011NATIONAL SAVINGS BANK . ANNUAL REPORT 2012
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ROOTEDANNUAL REPORT 2012
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ROOTEDNATIONAL SAVINGS BANK l ANNUA
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5MISSIONProviding our customers wit
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7ROOTEDFor over 40 years, the Natio
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92000Establishment of subsidiary co
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11HOW WE PERFORMED IN 2012FINANCIAL
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13CHAPTER 1FIRMLY ANCHOREDSTRATEGY
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15A MESSAGE FROM MR SUNIL S. SIRISE
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17A MESSAGE FROM MR SUNIL S. SIRISE
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19A REVIEW BYMR. HENNAYAKE BANDARAG
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21A REVIEW BY MR HENNAYAKE BANDARAG
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23A REVIEW BY MR HENNAYAKE BANDARAG
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25CHAPTER 2HOW WE PERFORMED IN 2012
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33HOW WE PERFORMED IN 2012ECONOMIC
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35HOW WE PERFORMED IN 2012ECONOMIC
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37HOW WE PERFORMED IN 2012ACHIEVEME
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39HOW WE PERFORMED IN 2012OPERATION
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51HOW WE PERFORMED IN 2012FUTURE PL
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53CHAPTER 3ROOTED IN OUR HERITAGEGO
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55ROOTED IN OUR HERITAGEGOVERNANCE
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Page 105 and 106: 103CHAPTER 4ASSESSING AND MANAGING
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Page 139 and 140: 137CHAPTER 5BRANCHING OUT INTO NEW
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183CHAPTER 6THE RESULTS OF A CHALLE
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185THE RESULTS OF A CHALLENGING YEA
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251CHAPTER 7ANNEXURESNATIONAL SAVIN
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253STATEMENT OF FINANCIAL POSITION
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255TEN YEARS AT A GLANCE(Rs Mn)Year
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257OUR PRODUCTS AND SERVICESSAVINGS
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259OUR PRODUCTS AND SERVICES19. Ran
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261OUR PRODUCTS AND SERVICESOUR EXT
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263BRANCH NETWORKCentral Province1.
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265CORRESPONDENT BANKSCiti Bank NA,
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267EXCHANGE COMPANIESHabib Qatar In
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269GLOSSARYCredit RatingsAn evaluat
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271GLOSSARYReturn on Average Assets
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273CORPORATE INFORMATIONCOMPLIANCE
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Annual Report 2012 - National Savings Bank

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