Risk management system
The risk management system of OJSC "Keremet Bank" is a part of the overall corporate governance system of the bank, aimed at the sustainable development of the bank in accordance with the adopted business strategy. Effective corporate governance is one of the most important conditions for ensuring the stable development of the bank and the banking system as a whole. For these purposes, the bank has the Risk Management Committee.
The goals and objectives of risk management, as well as related measures and activities to prevent and minimize losses (which may be caused to OJSC "Keremet Bank" as a result of exposure to risks in the course of banking activities) are defined in the Risk Management Policy, which is reviewed annually and approved by the Board of Directors of the bank.
The risk management system is a process that includes four main elements: risk identification, risk measurement, risk control, and risk monitoring. Risk measurement or risk assessment is carried out through the preparation of the bank's risk map, and the process is governed by the Regulations on the Risk Map of OJSC "Keremet Bank".
Risk management is carried out comprehensively and simultaneously at all levels of the bank, including:
- strategic level, which covers the functions of the Board of Directors and the Management Board: identifying risks, establishing a risk level acceptable to the bank, defining a strategy, risk management procedures, and establishing adequate control systems;
- macro-level covering the functions of the bank's structural divisions, risk management activities of mid-level managers and functional divisions related to the risk review;
- micro-level, which includes the activities of persons/employees who accept risk on behalf of the bank, limited to compliance with operational procedures, internal control procedures and other instructions established by the management of the bank.
To review and assess risks, independent Risk Management Department operates throughout the bank, which identifies, measures, monitors and controls bank risks on a daily basis. Risk management is the responsibility of the executive body and/or structural units responsible for certain types of risks. The Risk Management Department submits reports to the Risk Committee at least on a monthly basis, and submits reports to the Board of Directors of the bank on a quarterly basis.
The Board of Directors has approved the Risk Management Strategy and Risk Management Policy. The bank's overall risk appetite and risk map are approved by the Board of Directors on an annual basis.
The Risk Management Department constantly monitors the dynamics of key risks and the implementation of established standards and limits. Both classical tools, such as gap analysis (gap management), stress testing (scenario modeling), setting limits and thresholds for economic standards, and modern tools for analysis and forecasting using econometric models are used as analytical tools for risk management.
The bank pays great attention to the development of the risk culture through the involvement of all structural divisions of the bank in the risk management process, as well as through the regular exchange of information between the Board of Directors, Management Board, Risk Management Committee and employees of the bank. Training seminars in the field of risk management are held for employees.
Credit, operational and market risk management programs are currently in place as required by the Basel II recommendations. At the same time, OJSC "Keremet Bank" will continue to improve the risk management system, striving to meet the best international standards in the field of risk management and the requirements of the National Bank of the Kyrgyz Republic.
