Page 88 - EXIM-Bank_Annual-Report-2023

EXIM BANK MALAYSIA
86 A Vision to Serve Empowering Growth Management Discussion and Analysis
ANNUAL REPORT 2023
STATEMENT OF RISK MANAGEMENT

Key Elements of Risk Appetite

Links 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 management strategy, its risk appetite is aligned to the Bank’s strategy and considered in the budget
setting and decision-making process to ensure appropriate and reasonable projection for business growth.

The Bank’s Risk Appetite Policy (the Policy) addresses the following:
a. Overall approach, including policies, processes, controls and systems, through which the risk appetite is established,
communicated, monitored and reported.
b. The governance in overseeing the implementation, monitoring and reporting of the risk appetite in the 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 and Compliance
8. Environmental, Social and Governance 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.