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TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD
Notes to Financial Statements, continued Year ended March 31, 2013
25. Financial instruments, continued
Risk management framework, continued
The Directors may appoint such person(s) as necessary to achieve NIB’s investment objectives. The pursuit of these objectives also involves assuming responsibility for the establishment and oversight of NIB’s risk management framework and for developing and monitoring NIB’s risk management policies.
NIB’s risk management policies are established to identify and analyse the risks faced by NIB, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and NIB’s activities.
The Directors appoint an Investment Committee and designate its Chairman who is a director. The Directors also appoint an Investment Manager who has responsibility for the day to day management of NIB’s assets.
NIB’s investment portfolio comprises mainly quoted equity securities and debt securities, long-term receivables and deposits.
(a) Credit risk
Credit risk is the risk that a contributor or counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with NIB, resulting in a financial loss to NIB.
NIB’s policy over credit risk is to minimise its exposure to counterparties with perceived higher risk of default by taking collateral.
Credit risk is monitored on a regular basis by the Investment Committee.
NIB management are of the opinion that NIB’s policies governing delinquent accounts and provisions for impairment / fair value adjustments ensure that these financial statements accurately reflect any credit risk associated with amounts due from contributors and debtors. As explained in note 3(f)(i), NIB recognises surcharges on a cash basis. The provision for impairment represents the estimate of incurred losses in respect of contributions receivable and is made up of a specific loss component relating to individual exposures.
The maximum exposure to credit risk is represented by the carrying amount of each financial asset on the statement of financial position.
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