Note 15 Risk management General The Board has established various policies for management and control of key risks. The policies, which are updated regularly, describe both quantitative risk limits and relevant qualitative guidelines. The Board receives compliance and risk control reports relating to the established policies, from the administration regularly and as required. The Bank is exposed to different types of business risk. Liquidity risk, credit risk and market risk are three key risks described in more detail below. Liquidity risk The Board has adopted a finance policy with guidelines for liquidity management, risk limits, follow-up, and reporting in the area. The guidelines are reviewed by the Board at least once a year. The Board receives regular reports on the development of the Bank’s liquidity risk. The Bank aims to have low liquidity risk. The risk is continuously monitored, and the Bank invests in such a way that the liquidity risk is kept low. The Bank’s investments consist mainly of deposits in other financial institutions and in interest-bearing securities with good liquidity and low counterparty risk. Credit risk The Bank’s general strategy for credit risk is defined in the Bank’s credit policy. The general principles stipulate, among other things, the following: Ǵ The Bank’s loans shall only be to private individuals. Ǵ The Bank’s loans shall be well diversified. Ǵ All customers shall be subject to a credit assessment. Ǵ In addition to credit score rules, the customer must also be accepted in accordance with the Bank’s policy rules and the Bank’s requirements for ability and willingness to pay. The Banks management of the Credit assessment is monitored on a regular basis. The Credit Policy contains trigger levels of PD and Net loss rate. If the trigger levels are reached, evaluation is conducted and/or action to mitigate reached levels are implemented. All our policy rules are reviewed monthly including the performance on our loss estimates, PD (scorecards). Market risk The Bank’s goal is to have low exposure to market risk. Market risk is continuously monitored, and the Bank’s investments are made in such a way that the market risk is kept low. The Bank’s investments mainly consist of deposits in other financial institutions or in interestbearing securities with short-term interest rates and good liquidity. Komplett Bank / Annual Report 2022 71
RkJQdWJsaXNoZXIy NTYyMDE=