Yoma Bank has established risk appetite statement which provides the Bank with rigour when setting strategic and budget objectives, selecting new products or services and assessing entry into new markets. It includes the quantum and type of risk that the Bank is willing to take in order to meet its Strategic Objectives and the Bank’s risk appetite, risk tolerance as well as early warning levels.
Risk appetite statement defines key risk indicators and threshold across key areas including but not limited to credit risk, operational risk and liquidity risk.
Key Risk indicators and threshold alongside with risk appetite statement are reviewed and approved annually by the Board. In addition to Key Risk Indicators, a number of other risk appetite metrics across the entire risk spectrum, aligned with the Bank’s business strategy and requirements from Regulator, Investors and Financial Institutions, have been identified and will be monitored on a daily/monthly/quarterly and yearly basis.
Key Risks and How the risks are managed
|Key Risk||Definition||How risk is managed|
|Credit Risk||Risk of loss arising from any failure by a borrower or counterparty to meet its financial obligations when such obligation are due||Board of Directors approve major policies and limits that govern monitoring of the credit risk. The Bank structures the levels of credit risk it undertakes by placing limits on the amount of risk acceptable in relation to one borrower, or group of borrowers and industry segments.|
|Operational Risk ||Risk of loss resulting from inadequate or failed internal processes, people and system or from external event||Balancing the cost and risk within the constraints of the risk appetite of the Bank and consistent with the prudent management required of a large financial organization|
|Liquidity Risk||A firm's possible inability to meet its short-term debt obligations, thereby incurring exceptionally large losses||Board of Directors approve an asset liability management (ALM) policies. Liquidity limits are set to address liquidity shocks, whether affecting most financial institutions or the Yoma Bank uniquely, are fully covered and a Contingent Funding Plan is developed. Liquidity levels are being strictly monitored for adherence to the Board specified minimums (as defined in the ALM policy) or the requirements prescribed by the CBM.|