Risk Management Stages and Structure
The bank manages risks in accordance with the following stages, each involving responsible subdivisions/employees.
Risk identification (definition)
The bank’s bylaws give a wide list of risk types to which it can be exposed in its activities, specifying rules to qualify them as critical, describing the nature of their origin, and listing affected products, processes and operations.
Risk appetite determination
The bank determines tolerances for critical risk types. Risk appetite indicator determination process and algorithms (for calculable indicators) are set out in the bank’s bylaws.
The bank takes steps to identify any risks posed by operations made and products offered. Risk identification procedures are set out in the bank’s bylaws.
The bank performs qualitative and/or quantitative risk assessment. Assessment algorithms are set out in the bank’s bylaws and undergo testing for their relevance and effectiveness.
Selecting responses to risks and risk events
Based on risk assessment, the bank takes, limits, shares or excludes a risk using risk management tools. Responses to risk events are selected based on their efficiency.
The bank monitors risks taken and adds further responses in the case of a material increase in the level of a risk or a change in its profile. Monitoring procedures are set out in the bank’s bylaws. Monitoring results are reflected in the bank’s internal reporting.
Control of risk level and compliance with risk management procedures
The bank controls compliance with established limits, risk appetite indicators (key risk indicators) and other limitations. Three types of control are in place: prior, current and follow-up control. The bank also controls compliance with risk management procedures. Control (including remote control) procedures are set out in the bank’s bylaws.
Qualitative performance indicators of risk management subdivisions
Closing each reporting period with COR below the ceiling is a key qualitative performance indicator of the Bank’s risk management function.