Page 177 - EXIM-Bank_Annual-Report-2022
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A VISION       COMMITMENT      EMPOWERING       ENSURING        ENHANCING        FINANCIAL
                 TO SERVE        TO LEAD          GROWTH        SUSTAINABILITY  GOVERNANCE       STATEMENTS        175

            Notes to the fiNaNcial statemeNts







            44.   FINaNCIaL RISk MaNaGEMENT POLICIES
                 The Group’s and the Bank’s financial risk management policies seek to enhance shareholder’s value. The Group and the Bank
                 focus on the unpredictability of financial markets and seek to minimise potential adverse effects on the financial performance
                 of the Bank.
                 The Risk Management Division (“RMD”) of the Group and the Bank is responsible for formulating policies and the oversight of
                 credit, market liquidity and operational risks.
                 Financial risk management is carried out through risk assessment and reviews, internal control systems and adherence to
                 Group’s and Bank’s financial risk management policies, which are reported to and approved by the Board. The Board also
                 approves the treasury practices which cover the management of these risks.
                 The main areas of financial risks faced by the Group and the Bank and the policies are set out as follows:

                 a.   Capital management
                    Capital management refers to continuous, proactive and systematic process to ensure the Group and the Bank have
                    sufficient capital in accordance to its risk profile and regulator’s requirements.
                 b.   Market risk

                    The Group’s and the Bank’s market risk arise due to changes foreign currency value which would lead to a decline in the
                    valuation of the Group’s and the Bank’s foreign currency base financial investments, derivatives and borrowings.

                 c.   Asset liability management risk
                    Asset Liability Management (“ALM”) risk comprises:
                    (i)  Interest rate risks

                        This refers to the exposure of the Group’s and the Bank’s financial conditions due to adverse movements in interest
                        rates to the banking book.
                    (ii)   Liquidity risks

                        Defined as the risk of not being able to obtain sufficient funds in a timely manner at a reasonable cost to meet
                        financial commitments when due.

                 d.   Credit risk
                    Credit risk is defined as risk due to uncertainty in the customers or the counterparties ability to meet its obligations
                    or failure to perform according to the terms and conditions of the credit-related contract.
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