JPSCU AR 2018 finan web

NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st December 2018
(Expressed in Jamaican Dollars unless otherwise indicated)
4. Financial Instruments & Financial Instruments Risk Management (cont'd):
(c) Market risk (cont'd)
iii) Equity price risk
Equity price risk arises from available-for-sale equity securities held by the Credit Union as part of its
investment portfolio. The primary goal of the Credit Union's investment strategy is to maximize returns on
investments and to have an appropriate asset mix.
iv) Operational Risk
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the
Credit Union's processes, personnel, technology and infrastructure, and from external factors other than
financial risks such as those arising from legal and regulatory requirements and generally accepted standards
of corporate behaviour.
The Credit Union's objective is to manage operational risk so as to balance the avoidance of financial losses
and damage to its reputation with overall cost effectiveness and to avoid control procedures that restrict
initiative and creativity.
The primary responsibility for the development and implementation of controls to identify operational risk is
assigned to Senior Management. This responsibility is supported by overall Credit Union standards for the
management of operational risk in the following areas:
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Requirements for the periodic assessment of operational risks faced, and the adequacy of controls and
procedures to address the risks identified.
Requirements for the appropriate segregation of duties, including the independent authorisation of
transactions.
Requirements for the reconciliation and monitoring of transactions.
Compliance with regulatory and other legal requirements.
Documentations of controls and procedures.
Requirements for the reporting of operational losses and proposed remedial action.
Development of contingency plans.
Training and professional development.
Ethical and business standards.
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(d) Fair Value:
Risk mitigation, including insurance where this is effective.
Compliance with Credit Union policies is supported by a programme of periodic reviews undertaken by the
Credit Union's Regulatory Body. The results of these are discussed with the Credit Union's Management and
Board of Directors.
Fair value amounts represent estimates of the arm‟s length consideration that would be currently agreed upon
between knowledgeable, willing parties who are under no compulsion to act and is best evidenced by a quoted
market price, if one exists.
39 Annual Report 2018