risk management
A Risk Management Basic Policy is established, which serves as the road map for the Bank’s risk management activities and clearly lays out the types of risks to be addressed as well as the relevant management structures and mechanisms.
Abstract
37 Approach to Risk Management Financial institutions have been greatly affected by changes in the economic and financial environments in recent years. Under these conditions, prompted by the growing diversity and complexity of their operations, financial institutions have been pressed to construct appropriate risk management systems to sustain and enhance their business soundness while fulfilling their social responsibilities. Cognizant of this fact, the Bank has established a Risk Management Basic Policy, with the aim of further enhancing its risk management capabilities. This policy serves as the road map for the Bank’s risk management activities and clearly lays out the types of risks to be addressed as well as the relevant management structures and mechanisms. With this in mind, the Bank separates the risks that it must manage into two broad categories. One comprises risks actively taken on to generate profits (i.e., credit risk and market risk), and the other comprises risks passively incurred in the course of carrying out operations (i.e., settlement risk and legal risk). Specific risks are dealt with in accordance with individual guidelines based on risk type, while an integrated approach is taken to manage risk on a Bank-wide basis.