Page 71 - ACCESS BANK ANNUAL REPORTS_eBook

lieve that risk management encompasses the insights de- ensuring overall sustainability of our business activities.
livered by information which facilitate appropriate actions.
Access Bank has a robust Group risk management frame- Every business activity in our Group requires us to put cap-
work, which gives full Group-wide coverage of a variety of ital at risk in exchange for the prospect of earning a return.
risks. Our annual risk cycle is designed to give management In some activities, the level of return is quite predictable,
relevant, up-to-date information from which trends can be whereas in other activities the level of return can vary over
observed and assessed. The governance structure sup- a very wide spectrum, ranging from a loss to a profit. Ac-
porting our risk cycle is designed to deliver the right infor- cordingly, over the past year, we have expended substan-
mation, at the right time, to the right people. tial energy on improving our risk and capital management
framework to focus on taking risks where we:
Here in Access Bank, we have a holistic view of all major
risks facing the Bank. We remain vigilant with regard to both • Understand the nature of the risks we are taking,
known and emerging risks and ensure that we are strong and what the range of outcomes could be under
enough to withstand any exogenous shock. Our Board-lev- various scenarios;
el risk committees play a critical role in providing oversight • Understand the capital required in order to
of risk management and ensuring that our risk appetite, risk assume these risks;
culture and risk profile are consistent with and support our • Understand the range of returns that we can earn
strategy to deliver long-term sustainable success in achiev- on the capital required to back these risks; and
ing our strategic vision of being the World’s Most Respect- • Attempt to optimize the risk-adjusted rate of
ed African Bank. return we can earn, by reducing the range of
outcomes and capital required arising from these
Risk, by definition, is dynamic in nature. The management risks, and increasing the certainty of earning an
of risk, consequently, must be evolving, necessitating regu- acceptable return.
lar review of the effectiveness of each enterprise risk man-
agement component. It is in the light of this that Access Our objective of balancing risk, return and capital has led us
Bank’s Enterprise-wide Risk Management Framework is to substantially enhance our risk management methodolo-
subject to continuous review to ensure effective and cut- gies; in order to be able to identify threats, uncertainties and
ting-edge risk management. The review is done via contin- opportunities and in turn develop mitigation and manage-
uous self-evaluation and monitoring by the risk manage- ment strategies to achieve an optimal outcome.
ment and compliance functions in conjunction with internal
audit; and through independent evaluation by external au- Value is added for shareholders if our process allows us to
ditors, examiners and consultants. demonstrate sustainable risk-adjusted returns in excess
of our cost of capital. The process provides security to our
We run an automated and workflow-driven approach to capital providers and clients by assuring them that we are
managing, communicating, and implementing Governance, not taking on incremental risks which adversely affect the
Risk Management and Compliance (GRC) policies and pro- outcomes we have contracted to deliver to them.
cedures across the Bank. This provides an integrated and
flexible platform for documenting and analysing risks, de-
veloping mitigation plans, defining controls, and managing
ongoing risk assessments. It provides clear visibility on key eNterPrISe-WIDe SCeNarIO aND StreSS teStINg
risk indicators, assessment results, and compliance initia- We use robust and appropriate scenario stress testing to
tives with integrated reporting of self-assessments, inde- assess the potential impact on the Group’s capital ade-
pendent assessments, and automated controls vis-à-vis quacy and strategic plans. Our stress testing and scenario
set limits. analysis programme is central to the monitoring of strate-
gic and potential risks. It highlights the vulnerabilities of our
We believe that understanding and managing our risks and business and capital plans to the adverse effect of extreme
continuously improving our controls are central to the deliv- but plausible events. As a part of our core risk management
ery of our strategic objectives. The Board’s risk committees practices, the Bank conducts enterprise-wide stress tests
play an active role in ensuring that we undertake well-mea- on a periodic basis to better understand earnings, capital
sured, profitable, risk-taking activities that support long- and liquidity sensitivities to certain economic scenarios,
term sustainable growth. including economic conditions that are more severe than
anticipated. The outcome of the testing and analysis is also
BALANCING RISK AND RETURN used to assess the potential impact of the relevant sce-
Balancing risk and return and taking cognizance of the cap- narios on the demand for regulatory capital compared with
ital required demands rigorous analysis. The ultimate aim its supply. These enterprise-wide stress tests provide an
is to optimize the upside and minimize the downside with understanding of the potential impacts on our risk profile,
a view to adding value to our shareholders, and providing capital and liquidity. It generates and considers pertinent
security to our other capital providers and clients, as well as and plausible scenarios that have the potential to adversely

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Annual Report & Accounts 2017