Annual REPORT

ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES TO THE FINANCIAL STATEMENTS (Continued)
4 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
(d)
Other risks (Continued)
iv)
Reputational risk
5 CAPITAL MANAGEMENT
Regulatory capital
Reputational risk is the potential that negative stakeholder impressions or perceptions, whether true or not, regarding
the Bank’s business practices, actions or inactions, will or may cause a decline in its value, brand, liquidity
or customer base. It is a resultant effect of all other risks highlighted in this report and therefore cannot be managed
in isolation. Therefore, when all the other risks are managed well, this risk is substantially minimised.
The Family Bank’s reputation is an invaluable business asset essential for optimising shareholder value, hence it
is constantly under threat. Our services and activities, including new ones, ensure the Bank’s good reputation is
always maintained or enhanced.
The Ultimate responsibility for this risk rests with the Board of Directors and Senior Management who examine
the Bank’s reputational risk as part of their regular mandate. They are assisted in this aspect by the Marketing &
Corporate Communications Department.
Their purpose is to ensure that all products, services, and activities meet the Bank’s reputational risk objectives in
line with the Board of Director’s approved appetite. Nonetheless, every employee and representative of the Bank
has a responsibility to contribute positively to our reputation.
Senior Management and the BRMC receive periodic reports from Risk & Compliance Department on the assessment
of the Bank’s reputational risk exposures that arise from its business activities.
How we manage reputational risk
Every employee and representative of the Bank has a responsibility to contribute in a positive way towards our
reputation. This is through ensuring ethical practices are always adhered to, interactions with all stakeholders are
positive, and we comply with applicable policies, legislation, and regulations
Reputational risk is most effectively managed when every individual works continuously to protect and enhance
our reputation. In addition our customer service department maintain a log of all incidences emanating from
negative media publicity and customer complaints touching on the reputation of the bank.
The group’s objectives when managing capital are:
· To safeguard the group’s ability to continue as a going concern so that it can continue to provide returns for the shareholders
and benefits for the other stakeholders.
· To maintain a strong capital base to support the current and future development needs of the business.
· To comply with the capital requirements set by the Central Bank of Kenya.
Capital adequacy and use of regulatory capital are monitored by management employing techniques based on the guidelines
developed by the Central Bank of Kenya for supervisory purposes. The required information is filed with the Central
Bank of Kenya on a monthly basis.
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