Risk Management

Managing all risk categories

Credit risk

We take measures to safeguard the company against the potential inability of borrowers or counterparties to repay their debts partially or wholly. Our main objective is to continuously and systematically monitor the loan portfolio and maintain the credit exposure within the acceptable overall risk tolerance levels.

The credit risk management framework is based on a series of credit policy procedures, measurement systems and models, and credit risk monitoring and control.

We continuously review the models, to ensure that they:

• Are in line with the applicable institutional and supervisory framework.
• Are adjusted to the prevailing economic circumstances.
• Meet the nature and scope of our business activities.

Market risk

We pre-empt possible losses arising from unfavourable changes in the value or volatility of interest rate markets.

Our policies aim at establishing principles and a robust framework for market risks in 2 books:

• Trading, related to controlling the risk inherent in transactions between treasury management units and local units per country.
• Banking, related to exchange rate and interest rate risks.

Liquidity risk

We safeguard our ability to maintain adequate liquidity to fulfil our regular or extraordinary transactional obligations.

Stress tests are conducted monthly, in accordance with our approved Liquidity Risk Policy.

Climate and Environmental, Social and Governance (ESG) risk

We align ourselves with the prevailing supervisory guidelines and incorporate Climate and ESG risks in our Risk Management Framework which may relate to:

• Transition risks.
• Physical risks.

Climate and ESG risk may also manifest through other types of risks, such as credit risk, market risk, liquidity risk and operational risk.

We monitor the evolving regulatory framework and all developments in the sector, and adapt our policies and procedures accordingly.

Operational risk

We try to prevent and address cases caused by:

• Inadequacy or failure of internal procedures and IT systems.
• People, intentionally or unintentionally.
• External events.

We have adopted a standardised approach for the operational risk capital calculation and fulfil all quality requirements set therein. With the aim of managing operational risk more effectively, we have formulated an Operational Risk Framework.

Risk Management Committee

The Board of Directors appoints the Risk Management Committee. The Committee assists in the adoption of a clear risk appetite framework, in relation to:

• Strategy
• Budget preparation
• Capital management and liquidity
• Remuneration
• ESG issues

The Risk Management Committee works closely with the Audit Committee to implement risk mitigation and corrective measures.

Read more about the responsibilities of the Risk Management Committee.

Risk Management Divisions

With the aim of implementing and monitoring the Risk Management Framework and the guidelines of the Risk Management Committee, we have established dedicated units. View all our risk management units in our Organisational Chart.