Annual Report 2014

Risk Management

The strategic goal of risk management is to ensure a certain level of financial stability for the Bank. The risk management system designed by the Bank is a set of measures and solutions to detect, moni­tor, assess and determine an acceptable level of all material risks. Once completed, the Bank then implements activities to limit each type of risk and/or put into practice other mechanisms to optimize risks.

The Bank's Supervisory Board approves the Risk Management Policy as required by current legislation. The Bank's Supervisory Board has a dedicated Risk Management Committee which assists the Supervisory Board in determining the priority areas for the Bank's risk management efforts and creating conditions required for proper risk management.

Risk management is carried out in accordance with internal documents that regulate the management of decision-making on credit policy, loan classification and creating provisions, the use of various tools to reduce credit risks (insurance, the guarantee of fulfilling obligations), and fixing the risk premium to the interest rate for credit risk depending on the quality and term of a par­ticular loan product etc. These documents meet Russian legislative requirements, including the regulations of the Central Bank of Russia.

The Risk Management Policy coordinates initiatives to enhance the risk management system, consistently improving methodology, standardizing and automating the risk management processes.

The risk management and control system addresses the following types of banking risks:

  • Credit risk;
  • Liquidity risk;
  • Market risk, including:
    • Stock market risk;
    • Currency risk;
    • Interest rate risk;
  • Operational risk;
  • Strategic risk;
  • Legal risk;
  • Reputation risk;
  • Country- and regional-specific risks.

The Bank has set up an appropriate management sys­tem for each significant type of risk that provides for adequate risk assessment and includes various risk limitation measures. The Bank compares assumed risks to the volume of the Bank’s capital, ensuring that it is adequate for the required level to meet the requirements of the Cen­tral Bank of Russia and the Bank’s creditors.

The Bank consistently enhances its risk management system, and takes measures to identify foreign taxpayers among its customers; it also develops procedures that are then used by the Bank to prevent money laundering and the financing of terrorism.