Annual Report 2012 - National Savings Bank

134ASSESSING AND MANAGING OUR RISK FACTORSRISK MANAGEMENTAs experienced in previous years, highfrequency of loss events of the Bank werereported with Execution, Delivery andProcess Management mainly consistingof losses relating to cash operationsaccounting for the highest numberof loss events. However the nancialimpact to the Bank was minimal.There were no incidents reported onClient Product and Business Practices,Employment Practices and work placesafety and External Frauds.Minimum Capital RequirementThe Bank is currently applying theBasic Indicator Approach (BIA) forCapital Allocation for OperationalRisk. The magnitude of operationalrisk is as follows.Risk MitigationThe Bank has established PolicyFramework, Committee Structures,organisation set up, Control Measuresetc as risk mitigation measures underthe operational risk managementframework. Also the system andprocedure improvements are beingcarried out to streamline the operationalrisk management process.Business Continuity Planning,Insurance upgrading and outsourcingare also strategies for risk mitigationsof the Bank. The Bank is currentlyinvolved in the implementation andreview of the salient features underthe Business Continuity Plan (BCP)and Disaster Recovery Plan (DRP).Year 2012 2011 2010Total Risk Weighted Amount (Rs.Millions) 91,641 89,407 73,865Risk Weighted Amount for Operational Risk (Rs.Millions) 24,038 23,770 20,138Level of Operational Risk as a % 26% 27% 27%Insurance policies have been reviewedto identify any uncovered areas, andthe respective business units have beenprovided with recommendations forimprovements. The outsourcing policyaddresses the criteria for selection ofareas for outsourcing, selection ofservice providers, periodic reviews onoutsourced activities, and executionand monitoring of Service LevelAgreements.TrainingA number of training programs havebeen conducted on Risk Management,Compliance and Operational risk areasand internal controls during the yearwith a view to developing a culture ofrisk awareness culture and improvingthe risk management process at theBank.NATIONAL SAVINGS BANK . ANNUAL REPORT 2012