The great significance that the Bank attaches to efficient risk management serves as the foundation underlying ENERGOBANK’S consistent and long-term success. Risk management’s day-to-day hard work is aimed at ensuring high asset quality, efficient use of capital and streamlining internal processes.
The risk management function within the Energobank is carried out in respect of financial risks, operational risks and legal risks. Financial risk comprises market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk. The primary objectives of the financial risk management function are to establish risk limits, and then ensure that exposure to risks stays within these limits. The operational and legal risk management functions are intended to ensure proper functioning of internal policies and procedures to minimise operational and legal risks.
Risk management at the Bank is carried on at multiple levels within the competencies as set by the Articles of Association and By-Laws. The risk management process is an ongoing process that embraces all hierarchical levels – from top management down to the grass-roots level where risks are underwritten or where they emerge. The Management Board interacts with the Supervisory Board in dealing with risk management issues drawing on international best practices.
Energobank’s Risk Management Bodies:
- Supervisory Board
- Management Board
- Asset and Liability Committee (ALCO)
- Credit Committee
- Risk Management Division
- Internal Audit Unit
- Other unit (within front office and back office).
The Supervisory Board within its competencies and as part of fulfilling its mandate as approved by the Shareholders’ Meeting provides a high-level strategy of risk management.
The management Board is responsible for providing a framework for and organisation of risk management at the Bank.
The Management Board, Credit Committee and Asset/Liability Committee are the Bank’s supreme corporate, operating and executive bodies responsible for design and maintenance of the Bank’s risk management environment.
ALCO within its authority determines the optimal state of the balance sheet and monitors its maintenance; it sets financial targets and keeps track of their achievement; it explores the cost of funding from various sources and looks into maturity gaps between assets and liabilities. Decisions by ALCO are subject to endorsement by the CEO of the Bank.
The Credit committee within its competencies approves decisions regarding credit and investment activities, controls and monitors credit risk, both at the individual counterparty level and at the portfolio level.
The Tariff Committee within its terms of reference explores the cost of services and looks into the market competitiveness of effective prices, being responsible for the Bank’s operating income policy.
Risk management lies with the Risk Management Division. The Risk Management Division provides both quantitative and qualitative assessment of risks to which the Bank is exposed or of those that may materialise in the future; it monitors risks for status and magnitude.
Ex-post control is exercised by the Internal Audit Unit which provides an assessment of adequacy of the Bank’s risk management systems to the Bank’s needs.