Risk Management
Responsibilities
Responsibility for risk management is designated at all levels within the Bank. The responsibilities for effective review and challenge reside with senior managers, risk oversight committees, Internal Audit, BRCC, BACC, BCGC, and the Board of Directors.
The Chief Risk Officer (CRO) is a member of the Management Executive Committee and has overall day-to-day accountability for risk management. The CRO regularly presents a report to the Board summarising developments in the risk environment and performance trends in the key portfolios. The Risk Committee regularly reviews this report and decides the required strategic action. The CRO manages the Independent Risk function, which monitors the Bank’s risk profile relative to established risk appetite.
The Board of Directors is the Bank’s principal decision-making forum. It has overall responsibility for leading, supervising and controlling the Bank, and is accountable to shareholders for creating and delivering sustainable shareholder value through its guidance and supervision of the Bank’s business. Amongst other items, the Board focuses on risk management, control and strategy. The Board is also responsible for the Internal Control Framework. It oversees the management of the most significant risks through the regular review of risk exposures and related key controls.
The Audit & Compliance Committee provides assistance to the Board to fulfil its duties to ensure and oversee the Bank’s financial statements, the qualifications, independence and performance of the Bank’s external and internal auditors, compliance with legal and regulatory requirements and internal policies, and internal control over financial reporting.
Stress Testing
In addition to its regular standardised risk reporting process, ADCB carries out (ad hoc) stress tests. Stress test is a technique used on asset and liability portfolios to determine their reactions to different financial situations. Stress tests are also used to gauge how certain stressors will affect a company or industry. They are usually simulation models that test hypothetical scenarios.
Several stress tests are conducted, both scheduled and ad hoc, in the form of sensitivity or scenario analysis, either for a specific risk type or for ADCB as a whole. The stress tests cover both the balance sheet and P&L statement, and are intended to aid a robust forwardlooking capital planning process that takes into account the unique tests faced by the Bank. Performance against certain key stress test scenarios is an integral part of the Bank’s risk appetite policy. The stress test can represent various economic situations such as severe economic crisis, counterparty failures, and a variety of projected major operational risk events.
Responsibility for risk management is designated at all levels within the Bank. The responsibilities for effective review and challenge reside with senior managers, risk oversight committees, Internal Audit, BRCC, BACC, BCGC, and the Board of Directors.
The Chief Risk Officer (CRO) is a member of the Management Executive Committee and has overall day-to-day accountability for risk management. The CRO regularly presents a report to the Board summarising developments in the risk environment and performance trends in the key portfolios. The Risk Committee regularly reviews this report and decides the required strategic action. The CRO manages the Independent Risk function, which monitors the Bank’s risk profile relative to established risk appetite.
The Board of Directors is the Bank’s principal decision-making forum. It has overall responsibility for leading, supervising and controlling the Bank, and is accountable to shareholders for creating and delivering sustainable shareholder value through its guidance and supervision of the Bank’s business. Amongst other items, the Board focuses on risk management, control and strategy. The Board is also responsible for the Internal Control Framework. It oversees the management of the most significant risks through the regular review of risk exposures and related key controls.
The Audit & Compliance Committee provides assistance to the Board to fulfil its duties to ensure and oversee the Bank’s financial statements, the qualifications, independence and performance of the Bank’s external and internal auditors, compliance with legal and regulatory requirements and internal policies, and internal control over financial reporting.
Stress Testing
In addition to its regular standardised risk reporting process, ADCB carries out (ad hoc) stress tests. Stress test is a technique used on asset and liability portfolios to determine their reactions to different financial situations. Stress tests are also used to gauge how certain stressors will affect a company or industry. They are usually simulation models that test hypothetical scenarios.
Several stress tests are conducted, both scheduled and ad hoc, in the form of sensitivity or scenario analysis, either for a specific risk type or for ADCB as a whole. The stress tests cover both the balance sheet and P&L statement, and are intended to aid a robust forwardlooking capital planning process that takes into account the unique tests faced by the Bank. Performance against certain key stress test scenarios is an integral part of the Bank’s risk appetite policy. The stress test can represent various economic situations such as severe economic crisis, counterparty failures, and a variety of projected major operational risk events.