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The Bank defines its risk appetite in terms of volatility of • Capital risk
earnings and the maintenance of minimum regulatory cap-
ital requirements under stress scenarios. Our risk appetite These risks and the framework for their management are
can be expressed in terms of how much variability of return detailed in the enterprise-wide risk management frame-
the Bank is prepared to accept in order to achieve a desired work.
level of result. It is determined by considering the relation-
ship between risk and return. We measure and express risk RESPONSIBILITIES AND FUNCTIONS
appetite qualitatively and in terms of quantitative risk met-
rics. The quantitative metrics include earnings at risk (or The responsibilities of the Risk Management Division, the
earnings volatility), liquidity and economic capital adequacy. Financial Control and Strategy Group, and other key stake-
In addition, a large variety of risk limits, triggers, ratios, man- holders with respect to risk management are highlighted
dates, targets and guidelines are in place for all the financial below:
risks (e.g. credit, market, asset and liability management
risks). RISK MANAGEMENT DIVISION

The Bank’s risk profile is assessed through a ‘bottom-up’ a) Champion the implementation of the ERM
analytical approach covering all the Group’s major busi- Framework across the Bank and its subsidiaries.
nesses and products. The risk appetite is approved by the
Board and forms the basis for establishing the risk param- b) Periodically receive risk reports from
eters within which the businesses must operate, including management highlighting key risk areas, control
policies, concentration limits and business mix. failures and remedial action steps taken by
management.
In line with our standard practice, the risk appetite metrics
are tracked against approved triggers while exceptions c) Develop risk policies, principles, processes and
are reported to management for prompt corrective ac- reporting standards that define the Bank’s risk
tions. Key issues are escalated to the Enterprise-wide Risk strategy and appetite in line with the Bank’s
Management committee and the Board Risk Management overall business objectives.
Committee.
d) Ensure that controls, skills and systems are in
RISK MANAGEMENT OBJECTIVES place to enable compliance with the Bank’s
policies and standards.
The broad risk management objectives of the Bank are:
• To identify and manage existing and new risks in a e) Facilitate the identification, measurement,
planned and coordinated manner with minimum assessment, monitoring and control of the level
disruption and cost; of risks in the Bank.
• To protect against unforeseen losses and ensure
stability of earnings; f) Embed risk culture in the Bank to ensure that
• To maximize earnings potential and everyone takes into consideration the Bank’s risk
opportunities; appetite in whatever they do.
• To maximize share price and stakeholder
protection; g) Collect, process, verify, monitor and distribute risk
• To enhance credit ratings, depositor, analyst, information across the Bank and other material
investor and regulator perception; and risk issues to senior management, the Board and
• To develop a risk culture that encourages all staff regulators.
to identify risks and associated opportunities as
well as to respond to them with cost effective h) Monitor compliance with bank-wide risk policies
actions. and limits.

SCOPE OF RISKS i) Empower Business unit risk champions to identi-
fy, monitor and report on the effectiveness of risk
The scope of risks that are directly managed by the Bank is mitigation plans in reducing risk incidence as relat-
as follows: ed to day to day activities in the unit.
• Credit risk
• Operational risk j) Ensure that laws, regulations and supervisory
• Market and liquidity risk requirements are complied with including
• Legal and compliance risk consequence management.
• Strategic risk
• Reputational risk j) Champion the implementation of Basel II and III.

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Annual Report & Accounts 2017