The basic motive of Risk Management Policy is to minimize the losses / prevent the occurrence of loss due to risks to which company is exposed to while dealing with the clients on day to day operations. BWC Markets (the “Company”) is committed to adopting appropriate measures and mechanisms towards ensuring minimizing occurrences of such losses. The Company hereby notifies that this Risk Management Policy is to be followed by all directors, officers & designated employees.
This policy applies to all the Company’s activities. It forms part of the Company’s governance framework and it applies to all employees and contractors.
The Company has a well-established risk governance structure which facilitates identification and escalation whilst providing assurance to the Board. The governance structure is supported with an active and engaged Board of Directors of the Company (the “Board”) and a risk management function that is independent of the business units. The head of risk management has direct access to the chairman of the Board and the Risk Management Committee without impediment.
The Table below illustrates the inter-relationship between the Board, Board Committees and management committees that have the majority ofrisk oversight responsibilities forthe Company and their corresponding roles.
| Constitution | Responsibilities | |
| Board ofDirectors | Both executive and independent directors | The Board is responsible to authorise management to maintain an effective risk framework, and oversees compliance with safe, ethical and sound banking practices |
| Board Committees | A mixture of independent, experts and executive directors wherever allowed | the board committees which include primarily audit, risk management, strategy, corporate governance and conduct review, are responsible to advise board on risk profile, risk culture, risk appetite, risk strategy and risk management framework |
| Management Forum | Key members of management including the Chief Executive | some of the forums are executive forum,investment forum, risk management forums (asset and liability management committee, operationalrisk forum, portfolio and credit risk forum), management credit forum. |
| Risk Management Team | Portfolio and Credit Risk Team, Market Risk Team and Operational Risk Team | The team is responsible for identifying, measuring, monitoring and reporting significant risks across the organisation. |
The risk management framework is supported by a variety of risk management tools, which are regularly reviewed and updated to ensure consistency with risk-taking activities and relevance to the business strategies of the Company: Policies andLimits Policies related to specific types of risk or activities are used to manage risk exposure. Recommendations of risk management, internal audit, business units and senior executive management, industry best practices and regulatory requirements are factored into the policies. Prudential limits and tolerances are set as a prudent approach to manage risks. Limit setting establish accountability for key activities within the risk taking activities and establish the conditions under which transactions may be approved or executed. The Board approves all the policies which have clear accountability and ownership and the management is responsible and accountable for the effective implementation and monitoring of risk appetite.
The Company continuously monitors the risk exposures to ensure business activities are operating within approved limits or guidelines. Breaches, if any, are reported to senior management and/or to the Board.
The risk-bearing capacity analysis is a key part of overall bank management and the Company’s the purpose is to ensure that sufficient capital is held for the risk profile of the Company at all times.
The Board and senior executives of the Company place great emphasis on risk management. We constantly enhance the risk management practice as a way to strengthen our competitive advantage. The objectives of our risk management are not only to passively control the expected and unexpected losses of the business but also to actively increase the risk-adjusted return on capital. To utilize the capital more efficiently, we allocate the risk capital based on so called “risk appetite”, which takes into account the availability of liquid capital and the financial goals.
| Key Risk | Arising From | Measurement, monitoring and management ofrisk |
| Credit Risk | ||
| Credit risk is defined as the risk that the banking Company will suffer economic loss due to a Company borrower or counterparty failing to fulfil its financial or other contractual obligations | Credit risk arises when funds are extended, committed, invested, or otherwise exposed through actual or implied contractual agreements, whether reflected on- or off- balance sheet. Amongst the risks faced by SBM, credit risk generates the largest regulatory capital requirement. | Credit risk is: □ Measured as risk weighted exposures for performing and non- performing exposures. □ Monitored within regulatory and prudential limits by borrowers, portfolios, country and bank, approved by the Board within a framework of delegated authorities. Regular review of portfolio to proactively manage any delinquency and minimising any undue credit concentrations. □ Managed through a robust risk control framework which outlines clear and consistent policies, principles and guidance. |
| OperationalRisk | ||
| Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events. | Operational risk arises from human error, inappropriate conduct, failures in systems, processes and controls or natural and man- made disasters. It is inherent in all products, activities, processes and systems and is generated in all business and support areas. | Operational risk is: □ Measured using the risk and control assessment process which allows identification and evaluation of risks and effectiveness of controls; □ Monitored through regular risk assessment procedures, key risk indicators and internal loss database; and □ Managed through a conducive control environment with robust operationalrisk policies, processes, systems as well as appropriate risk culture within the organisation which contribute in maintaining a low operational loss experience over the years. |
| LiquidityRisk | ||
| The inability to meet contractual and contingent financial obligations, on- and off- balance sheet as they may come due. Our primary liquidity objective is to provide adequate funding for our business throughout market cycles, including periods of financial stress. | Liquidity risk arises from mismatches in the timing of cash flows. Funding risk arises when the liquidity needed to fund illiquid asset positions cannot be obtained at the expected terms and whenrequired. | Liquidity and funding risk is: □ Measured using internal metrics including stressed cash flow projections, coverage ratios and advances to core funding ratios; □ Monitored against the Company’s liquidity and funding risk framework and overseen by the Asset and Liability of different entities and the Board Risk Management Committee. |
Risks shall be monitored and controlled on an ongoing basis, as part of the Risk Management Process. Ultimate responsibility for monitoring and control lies with the - Risk Manager , and should be ongoing at the appropriate levels. At each of these levels, Risk Registers should be regularly reviewed and revised according to any changes affecting the status of a risk, the risk score or progress made in completing mitigating actions. Each of these elements are revisited on an ongoing basis; for example, mitigating actions are regularly reviewed for their impact and effectiveness in controlling the risk and in reducing the risk score. Where a mitigating action is complete, it is removed from the relevant column and where appropriate, referred to under Current Controls. Where a risk score has escalated, action is taken to identify and implement control measures in order to reduce the risk score. Reporting arrangements also provide an additional level of monitoring and control. The Board will receive a high-level report on risk twice per year. The report will provide a summary update on the risks included in the Risk Register, giving current risk scores and notification of any significant changes. The Risk Committee will receive a more detailed report on all risks rated as high. the Company’s management will receive more detailed report on risk for the Strategic Risk Register. Risks will be monitored and controlled as part of the company’s planning process, risk registers will be monitored as part of established management processes within each functional unit.
Risk appetite is an articulation and allocation of the risk capacity or quantum of risk the Company is willing to accept in pursuit of its strategy, Risk bearing capacity represents the ability to bear risk in terms of available capital, and ability to raise additional capital. It also covers strength of operational processes and operating culture in the organisation The Company maintains a comprehensive risk appetite framework, providing a robust foundation for risk appetite setting and management across the Company. The framework provides a structured approach to the identification, measurement, and control of risk. It encompasses a suite of policies, processes, controls and systems for assessing the appropriate level of risk appetite required to constrain its overall risk profile. It is intended to ensure that the Company maintains an acceptable risk profile by providing a common framework and a comparable set of risk appetite measures, supported by management level limit structures and controls for senior management and the Board to clearly indicate the level ofrisk the Company is willing to accept.
This risk management policy shall be reviewed and approved by the board every once a year.
3708, Concord Tower,
Media City, Dubai, U.A.E.
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