Page 79 - GTBANK GAMBIA ANNUAL REPORT 2021

Exposure to Interest Rate Risk – Trading and Non- Overall non-trading interest rate risk positions are
Trading Portfolios managed by Treasury, which uses Debt instruments,
advances to banks and deposits from banks to manage
The principal risk to which non-trading portfolios are the overall position arising from the Bank's nontrading
exposed is the risk of loss from fluctuations in the future activities.
cash flows or fair values of financial instruments because
of a change in market interest rates. Interest rate risk is Operational Risk
managed principally through monitoring interest rate gaps
and by having pre-approved limits for re-pricing bands. Guaranty Trust Bank defines Operational Risk
The ALMAC is the monitoring body for compliance with management (OpRisk) as “the direct/indirect risk of loss
these limits and is assisted by Risk Management in its resulting from inadequate and/or failed internal process,
day-to-day monitoring activities. A summary of the Bank's people and systems or from external events”. This
interest rate gap position on trading and non-trading definition requires the review and monitoring of all
portfolios is as follows: strategies and initiatives deployed in its people
management, process engineering and re-engineering,
The Bank makes use of limit monitoring, earnings-at risk technology investment and deployment, management of
gap analyses and scenario analyses to measure and all regulatory responsibilities and response to external
control the market risks exposures within its trading and threats. To ensure a holistic framework is implemented,
banking books. Operational Risk Management also monitors Strategic
and reputational risk from a broad perspective.
The bank also performs regular stress tests on its banking
trading books. In performing this, the bank ensures there The following practices, tools and methodologies have
are quantitative criteria in building the scenarios. The been implemented for this purpose:
bank determines the effect of changes in funding sources
and uses on the bank's liquidity. The key potential risks
the bank was exposed to from these instruments were
foreign exchange risk and interest rate risk (price risk, • Risk and Control Self Assessments (RCSAs)
basis risk). However, all potential risk exposures in the
course of the year were successfully mitigated as This is a qualitative risk identification tool deployed bank-
mentioned above.
wide. All branches and Head-office departments are
The management of interest rate risk against interest rate required to complete at least once a year. A risk-based
gap limits is supplemented by monitoring the sensitivity of approach has been adopted for the frequency of RCSAs
the Bank's financial assets and liabilities to various to be conducted by branches, departments, groups and
scenarios. Credit spread risk (not relating to changes in divisions of the bank. These assessments enable risk
the obligor/issuer's credit standing) on debt securities held profiling and risk mapping of the prevalent operational
by the Bank and equity price risk is subject to regular risks.
monitoring by Bank Management Risk committee, but is Risk assessment of the Bank's new and existing products
not currently significant in relation to the overall results / services are also carried out. This process also tests the
and financial position of the Bank.
quality of controls the bank has in place to mitigate likely
risks: a detailed risk register cataloguing key risks
Interest rate movements affect reported equity in the identified and controls for implementation is also
following ways:
developed and maintained from this process. Other Risk
Assessments conducted include Process Risk
• Retained earnings arising from increase or Assessments, Vendor Risk Assessments and Fraud Risk
decrease in net interest income and the fair value Assessments.
changes reported in profit or loss.
• Key Risk Indicators (KRI)
• Fair value reserves arising form increase or
decrease in fair value of FVOCI financial
These are quantitative parameters defined for the
instruments reported directly in other purpose of monitoring operational risk trends across the
comprehensive income. bank. A comprehensive KRI dashboard is in place
supported by specific KRIs for key departments in the
Annual Report 2021
bank. Medium to High risk trends are reported in the

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