JPS & Partners 2017 Annual Report
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Notes to the Financial Statements<br />
For the year ended 31st December <strong>2017</strong><br />
(Expressed in Jamaican Dollars unless otherwise indicated)<br />
4. Financial Instruments & Financial Instruments Risk Management (cont'd):<br />
(c) Market risk (cont'd)<br />
iii) Equity price risk<br />
Equity price risk arises from available-for-sale equity securities held by the Credit Union as part of its<br />
investment portfolio. The primary goal of the Credit Union's investment strategy is to maximize returns on<br />
investments and to have an appropriate asset mix.<br />
iv) Operational Risk<br />
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the<br />
Credit Union's processes, personnel, technology and infrastructure, and from external factors other than<br />
financial risks such as those arising from legal and regulatory requirements and generally accepted standards of<br />
corporate behaviour.<br />
The Credit Union's objective is to manage operational risk so as to balance the avoidance of financial losses<br />
and damage to its reputation with overall cost effectiveness and to avoid control procedures that restrict<br />
initiative and creativity.<br />
The primary responsibility for the development and implementation of controls to identify operational risk is<br />
assigned to Senior Management. This responsibility is supported by overall Credit Union standards for the<br />
management of operational risk in the following areas:<br />
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Requirements for the periodic assessment of operational risks faced, and the adequacy of controls and<br />
procedures to address the risks identified.<br />
Requirements for the appropriate segregation of duties, including the independent authorisation of<br />
transactions.<br />
Requirements for the reconciliation and monitoring of transactions.<br />
Compliance with regulatory and other legal requirements.<br />
Documentations of controls and procedures.<br />
Requirements for the reporting of operational losses and proposed remedial action.<br />
Development of contingency plans.<br />
Training and professional development.<br />
Ethical and business standards.<br />
Risk mitigation, including insurance where this is effective.<br />
Compliance with Credit Union policies is supported by a programme of periodic reviews undertaken by the<br />
Credit Union's Regulatory Body. The results of these are discussed with the Credit Union's Management and<br />
Board of Directors.<br />
(d) Fair Value:<br />
Fair value amounts represent estimates of the arm’s length consideration that would be currently agreed upon<br />
between knowledgeable, willing parties who are under no compulsion to act and is best evidenced by a quoted<br />
market price, if one exists.<br />
Pushing you Beyond All Limits!<br />
77<br />
<strong>JPS</strong> & <strong>Partners</strong> Co-operative Credit Union