2009 Annual Report and Financial Statements - UBA Plc

• Identify the risk inherent in
achieving UBA’s goals and
objectives
• Establish risk appetite
across the entire risk
spectrum
• Establish and
communicate risk
management frameworks
Risk management report (continued)
Identify Assess Control Report
• Build accurate and
consistent risk assessment
• Establish and implement
measurement reporting
standards/methodologies
• Build a risk profile for UBA
• Establish key control
processes, practices and
reporting requirements
• Monitor the effectiveness
of control
• Ensure all UBA’s exposures
are adequately identified,
measured and managed
in accordance with Board
approved frameworks
• Provide early warning
signals
• Ensure risk management
practices are adequate and
appropriate for managing
UBA’s risks
• Report areas of stress
where crystallisation of
risks is imminent
• Present remedial actions
to reduce and/or mitigate
such risks
• Report on sensitive and
key risk indicators
• Communicate with
relevant parties
Manage and
Challenge
• Review and challenge all
aspects of UBA’s risk profile
• Advise on optimising
and improving UBA’s risk
profile
• Review and challenge risk
management practices
RISK MANAGEMENT FRAMEWORK AND ORGANISATION
The functional components of the UBA risk management value chain are depicted in the organisational framework on page 90. Risk functions
are integrated at the Centre to ensure a consistent approach to risk assessment and monitoring of risks across the entire risk spectrum. The
Group Risk and Compliance Directorate further performs an oversight role over decentralised risk management and compliance functions in
subsidiaries. Subsidiary risk heads have a hard reporting line to the Group Chief Risk Offi cer.
Outlined below are the key activities of UBA’s enterprise-wide risk management framework that supports our robust risk governance foundation,
namely risk assessment, monitoring and risk mitigation.
RISK ASSESSMENT
The following risk types are assessed, monitored and managed in terms of the Group’s Principal Risk Management Framework.
Credit risk
Wholesale credit risk
The failure by corporate borrowers or counterparties to perform their payment, guarantee and/or other obligations.
Retail credit risk
The risk of suff ering fi nancial loss, should any of the Group’s consumer borrowers or counterparties fail to fulfi l their contractual obligations to
perform on their payment, guarantee and/or other obligations.
Market risk
The risk of losses in on and off - balance sheet positions arising from movements or volatility in market prices that could adversely aff ect business
objectives.
Liquidity risk
The risk to the Group’s earnings and capital arising from its inability to fund increases in assets or to meet its payment obligations to its customers
as they fall due or to replace funds when they are withdrawn.
Annual Report 2009 91
Financials