Page 82 - EXIM-Bank_Annual-Report-2022

A VISION COMMITMENT EMPOWERING ENSURING ENHANCINg FINANCIAL
80 EXIM BANK MALAYSIA ANNUAL REPORT 2022 TO SERVE TO LEAD GROWTH SUSTAINABILITY gOVERNANCE STATEMENTS 81

STATEMENT OF RISK MANAGEMENT

Key Elements of Risk Appetite

Linked to the Bank’s strategic objectives, capital and business plans.

Establishes the amount of risk the Bank is prepared to accept in pursuit of its strategic objectives and business plan,
considering the interest of its stakeholders within the boundaries of its capital adequacy and regulatory requirements.

Determines material risks and the maximum tolerance level of risks the Bank is willing to operate based on its risk appetite,
risk capacity and risk profile.

Includes quantitative measures that are translated into risk limits applicable to business lines which in turn will provide direction
to measure risk profile against risk appetite and risk capacity.

Includes qualitative statements for risk that cannot be measured e.g., reputational risk, as a guide for proper management of
such risks.

As part of the Bank’s risk strategy, its risk appetite is aligned to the Bank’s strategy and considered in the budget setting and
decision-making process to ensure projection for business growth.
The Bank’s Risk Appetite Policy (the Policy) address the following:

a. Overall approach including policies, processes, controls, and systems through which the risk appetite is established,
communicated, and monitored.
b. The governance in overseeing the implementation and monitoring of the risk appetite in EXIM Bank.
c. Address the Risk Appetite Statement (RAS) and risk appetite metrics coverage.
d. The roles and responsibilities of those overseeing the establishment, approval, implementation and monitoring of the risk
appetite framework.

The risk appetite metrics as the expansion of the broad RAS are to comprehensively manage the Bank’s operating dimensions
and the respective key enterprise risk categories as identified in the Risk Management Framework.

The articulation of the risk appetite metrics for the Bank’s key primary enterprise risk category are as follows:

Primary Enterprise Risk Category Risk Metrics Dimension

1. General • Overall risks

2. Credit Risk • Asset Quality
• Concentration Risk
• Insurance Business Exposures

3. Operational Risk • Loss event

4. Shariah Non-Compliance Risk • Shariah Non-Compliance (SNC) Income
5. Asset Liability, Liquidity and Market Risk • Capital/ALM/Liquidity Risk
• Earnings/Profitability
6. Information and Cyber Security Risk • System vulnerabilities
7. Compliance Risk • Regulatory & Compliance

8. Environmental, Social and Governance (ESG) Risk • ESG loan/financing exposures
The Board’s risk appetite must be assessed on a regular basis to ensure that it remains aligned with the Bank’s strategic objectives,
business performance, any new emerging risks, and external environment changes.