Capítulo I Presentación

TranslationInto English• Po rtf o l i o Qu a l i t yIn terms of the portfolio quality, it is expected that this willimprove as time goes by. In general, the programs of FondoMIVIVIENDA S.A. maintain low delinquency levels, as may beobserved in the graph below.This graph allows for the comparison of the differentproducts of Fondo MIVIVIENDA S.A. with the delinquencyof full-service banking, both for total credits (commercial,microenterprises, consumption and mortgages), andmortgage credits.COMPREHENSIVE RISK MANAGEMENTThe comprehensive risk management of Fondo MIVIVIENDAS.A. is a process implemented by our Board of Directors,General Management, Managements and all staff of theinstitution. It is applied throughout the entire entity, andhas been designed to identify, measure, control and reportpotential adverse events that may affect its performance. Thismanagement is carried out according to risk tolerance levels,which gives us reasonable security for the achievement ofobjectives, goals and the compliance with our mission.Comprehensive risk management is relatively new in FMVS.A. It was put into effect in 2008 and has been graduallyconsolidated. As of the close of the fiscal year 2010 wecan show relevant progress, in both focus and management,that provides the certainty that the institution’s resources(people, information an assets) are managed within aprudent scope of risks, as required by the Superintendencyof Banking and Insurance (SBS) in its different and extensiveregulations applicable to us as a supervised entity of thefinancial sector.The foregoing has been recognized through the successfulrisk classification process which the institution wassubjected to for the first time. Thus, during 2010, therisk categories (grade for financial strength) of “A” and“A-” were obtained from Class & Asociados S.A. andEquilibrium Clasificadora de Riesgos S.A., respectively. Bothrisk classification companies emphasized, among otherfundaments, the adequate risk management of FMV S.A.More specifically, the organization manages its risks in thefollowing manner:• Cr e d i t RiskThis risk refers to the probability, exclusively nationalfinancial entities, who channel our resources for theplacement of mortgage loans of our branches, fail to meettheir contractual obligations due to insolvency or the inabilityto pay and create a financial loss for us.During the process for the identification and managementof credit risks, FMV S.A. evaluates, approves and monitors thegranting and use of credit and investment lines for financialentities. For this purpose, it has the following updatedinternal standards:• Credit Risk Policy Manual• Credit Exchange Risk Policy ManualThe body responsible for approving credit operations isthe Risk Committee, which is made up by the Chairman ofthe Board and two (2) Directors. The Committee has a setof regulations and meets every two weeks (although itcan meet virtually when required). The meetings are alsoattended by the General Manager and the Head of theRisks Office, in the capacity of Secretary. All the resolutionsadopted by the Risk Committee are periodically reported tothe Board of Directors.The institution also strictly complies with the applicableregulations issued by the national supervisory body. Ofparticular importance is SBS Resolution 11356-2009,regarding credit evaluation, the classification of clients andthe constitution of credit provisions.Strict monitoring and control works are performed in orderto promptly identify possible situations involving thedeterioration of our clients, the quality and concentration ofthe credit portfolio, etc.The company has access to tools in a systemized model forthe calculation of provisions and an internal rating model(using the CAMEL methodology), applied for those clientfinancial entities that do not have risk classifications.Fiscal year 2011 includes plans for the completion of thesystematization of different credit risk tasks through theRisk Control System (RCS) developed internally.• Ma r ke t r is kThe market risks managed at FMV S.A. are various:• Exchange risk, related to adverse movements in theexchange rate, which may generate financial losses. Thestructural balance risk is controlled and monitored withparticular emphasis, along with exchange risks in theinvestment portfolios of the trusts we manage.For the control of exchange risks, a defensive hedgingstrategy is implemented with forward derivatives in theform of NDFs, covering 100% of our position in dollars.• Interest rate risk, which arises as a result of the variationswhich occur in the interest rates in the market. We controland monitor the structural balance risks and investmentportfolio risks of the trusts we manage.• Price risk, created as a result of changes in themarket prices of financial instruments, due to thecharacteristics of the instruments or market reasons,which we hold in the investment portfolios of the trustswe manage.Fondo MIVIVIENDA S.A. analyzes, evaluates and monitorsthe positions subject to market risk in its different portfolios,using methodologies which have the capacity to measurepotential losses associated with movements in prices,interest rates or exchange rates, as well as measuring theconcentrations of the positions and their sensitivity todifferent scenarios.Market and liquidity risks are dealt with by the RiskCommittee, but there is also an Investment Commissionwhich meets once a week to perform in-depth monitoring ofthe institution’s investments. This commission is made up ofthe General Manager, Financial Management, Risk Office andPlanning, Budget and Economic Studies Office.For the management of market and liquidity risks, FMV S.A.has the following updated internal standards:• Market and Liquidity Risk Management Policies andProcesses Manual• Liquidity Contingency Plan• Provision Methodology for Investment ValueDeterioration• Internal Rating Methodology for Mutual FundsFor the identification and quantification of market risks, varioustools are used which have been developed internally andsystematized in the Comprehensive Risk System (CRS), whichmay be used to calculate different risk measurements, such as:• Value at Risk (VaR) for exchange rate, VaR for interestrate and forward VaR• Duration and modified duration of assets in investment140 Fondo MIVIVIENDA S.A. Memoria Institucional 2010 141