Risk management policy
The Risk Management Policy of Vnesheconombank Group approved in 2013 seeks to build a common consolidated risk management system at all management levels, including Vnesheconombank and the Group’s entities.
The need to develop the Policy was due to a considerable increase in the volume of subsidiary operations associated with financial risks. The common risk management principles will also help Vnesheconombank to streamline the use of its own funds.
The Policy takes into account the requirements and recommendations of the Bank of Russia, supervisory agencies of other countries in which the Group’s entities are based, the Basel Committee on Banking Supervision, international risk management standards COSO, GRC, ISO 31000, and the IFRS as far as disclosure and risk assessment are concerned.
In implementing the Policy, the Group will address the following tasks:
- set up consolidated approaches to the risk assessment and assumption by Vnesheconombank and all entities of the Group; integrate local risk management systems into a single Group-wide risk management system;
- address the objectives set out in Vnesheconombank’s Development Strategy while maintaing its financial stability and ability to meet its obligations as they fall due;
- efficiently limit the risks assumed by Vnesheconombank and the Group’s entities to meet their obligations towards the Group’s lenders and customers as they fall due;
- efficiently manage the Group’s capital to ensure its break-even operation subject to risks and the accceptable capital adequacy ratio;
- obtain sufficient compensation for risks assumed on operations of Vnesheconombank and the Group’s entities;
- comply with Basel II and Basel III guidelines;
- ensure the transparency of the risk management system of Vnesheconombank and the Group’s entities.
Risk management system of Vnesheconombank Group
Vnesheconombank’s Supervisory Board
Approves the operating procedure of the Internal Control Service, the regulation on the credit policy, the procedure of issuing guarantees, sureties and loans to lending institutions and other legal entities, the guidelines and procedure for calculating credit risk indicators and limits, the guidelines for calculating the Bank’s equity (capital), capital adequacy ratio, the loss provisioning procedure and regulations on the Bank’s governing bodies.
Approves transactions related to acquisition, actual or potential disposal of property by the Bank, the book value of which equals to, or exceeds, 10% of the Bank’s equity, and sets the limit amount allocated to manage free cash (liquidity) of the Bank.
Determines the parameters of the Bank’s investment and financial operations, sets the limits and restrictions for the Bank’s loan portfolio breakdown within its competences granted under the Memorandum on Financial Policies and Federal Law No.
Management Board of Vnesheconombank
Approves transactions or groups of interrelated transactions related to acquisition, actual or potential disposal of property by the Bank, the book value of which falls within the range between 2% and 10% of the Bank’s equity.
Prepares, and submits to Vnesheconombank’s Supervisory Board for approval, proposals on the Bank’s key business lines, parameters of the Bank’s investment and financial operations, including related to risk management issues.
Chairman of Vnesheconombank
Issues orders and instructions with regard to the Bank’s risk management, approves regulations and technical banking procedures, and makes decisions on other issues related to risk management, except for the issues within the competence of the Supervisory Board and the Management Board of Vnesheconombank.
Credit Committee of Vnesheconombank
A permanent collective governing body of Vnesheconombank that focuses on preparing opinions based on its analysis of proposals to issue loans, guarantees, sureties and financing on a repayable basis, participate in authorised capitals and/or acquire bonds, set limits for counterparties and issuers, and on debt recovery and write-offs.
Asset and Liability Management Committee of Vnesheconombank
A permanent collective governing body of Vnesheconombank that focuses on preparing opinions and recommendations on asset and liability management, including issues related to the management of market and structural risks of the Bank and break-even operation of the Bank.
Internal Control Service of Vnesheconombank
Monitors the operation of the risk management system on an ongoing basis in line with the corporate regulatory documents of the Bank and provides its findings and recommendations based on its inspections to the Bank’s management.
Group Risk Director
Provides Vnesheconombank’s Management Board with consolidated reports on the risks of the Group and Vnesheconombank and information on the status of the Group’s and Vnesheconombank’s risk management system and any system development plans.
Risk Management Department of Vnesheconombank
Develops the guidelines and procedure to assess risks of various types and proposals to limit the risk level. Follows up the implementation of existing risk limits and risk management decisions. Prepares reports by risk type and line of business of the Bank. Follows up the compliance with the risk management principles and policy. Assesses the risks associated with new products and structured transactions. The Department includes units that monitor the risk level by risk type and line of business of the Bank, and a unit that monitors the risks of subsidiary entities.