Page 89 - EXIM-Bank_Annual-Report-2023

Management Discussion and Analysis Ensuring Sustainability Commitment to Lead Upholding Accountability Financial Statements 87

StRESS tESt
To anticipate and respond swiftly to the new or emerging risks, the Bank performs stress tests as part of the risk management
process. The results are integrated into the decision making and regularly reviewed against actual performance versus the risk
estimation (back-testing).
The stress testing exercise must be comprehensive and include both on and off-balance sheet exposures, commitments, guarantees,
and contingent liabilities, as well as other risk drivers on credit, market, operational and Shariah risk. The exercise must also
commensurate with the nature, size and complexity of the Bank’s business operations and risk profile.
As stress test is a continuous process, RMD will continuously strive for improvement on the stress test exercise by exploring
potential areas for enhancements, as well as establishing linkages between stress test to the risk appetite metrics moving forward.
Further to the above, reverse stress testing was also conducted in accordance with the requirements outlined in the Policy Document
on Stress Testing issued by Bank Negara Malaysia (BNM).
Respective primary enterprise risks in the Bank are managed by the following key frameworks and approved policies:

Key Frameworks • Risk Management Framework
• Technology Risk Management Framework
• Cyber Resilience Framework
Key Policies • Risk Appetite Policy • Policy on Asset Liability Management and Market Risk
• Credit Risk Policy • Policy on Liquidity Risk Management
• Policy on Expected Credit Loss • Policy on Risk Retention
• Policy on Operational Risk • Policy on Product Management
• Policy on Shariah Risk Management • Policy on Fraud Management

PRIMARY EntERPRISE RISK CAtEGoRY DEFInItIon & RISK MItIGAtIon

To enable robust and sustained growth, effective management of recognised major enterprise risk is critical.
Based on operating landscape in 2023, the Bank has identified the primary enterprise risk category and risk mitigation as follows:

no. Primary Enterprise Risk Definition
1. Credit Risk The risk due to uncertainty on the customer or the customer’s counterparty ability to
meet its obligations or failure to perform according to the terms and conditions of the
credit related contract.
2. Shariah non-Compliance Shariah Non-Compliance risk is the risk that arises from the Bank’s failure to comply with
(SnC) Risk the rulings of the Shariah Advisory Council (SAC) of Bank Negara Malaysia, standards on
Shariah matters issued by the Bank Negara Malaysia pursuant to section 29(1) of the IFSA
and section 33E(1) of the DFIA, or decisions or advice of the Shariah Committee for its
Islamic finance activities.
3. operational Risk Operational risk is the risk of loss resulting from inadequate or failed internal operational
or financial processes and systems, the actions of people or from external events.
4. Market Risk Market risk refers to the potential loss arising from adverse movements in the market
prices.
5. Liquidity Risk Liquidity risk is the risk of Bank’s inability to fund increases in assets and meet cash flow
obligations as they come due, without incurring unacceptable losses.