Risk management

The strength of AccessBank’s risk management is demonstrated by the excellent portfolio quality. Nevertheless, management is not complacent, recognising that as economic growth slows and the bank increases in scale, risks are also escalating. Strengthening risk management and control remains a continual and constant process. Credit and Operational risk , the major risks faced by AccessBank, is managed at branch level by strict policies and procedures, segregation of functions, and Senior Loan Officers, Senior Back Office Specialists, Chief Cashiers, and Heads of SME and Customer Service. These are branch-level managers dedicated to training, supervising and controlling their respective teams. They are supported by their Branch Manager and Head Office Business and Departmental Heads and training and support staff.
This matrix control structure of hierarchical subordination to the branch manager, with technical supervision by Head Office business managers, has proven to be not only efficient, but also effective in ensuring that policies and procedures are adhered to and risk is well managed.

In 2008, Risk Management was strengthened by the creation of a Risk Management Department and Risk, ALCO and IT committees, reporting quarterly to the Supervisory Board. Since its creation the Risk Management Department has grown to eight staff, responsible for reviewing all exposures over USD 100,000, undertaking selective portfolio reviews, and strategic monitoring and analysis of all aspects of risk.
Currency and liquidity risk is managed by a daily review by the Treasury Department, Finance Director and General Manager of the Bank’s currency and liquidity position and of their compliance with limits set by the Supervisory Board. Currency Risk is minimised by balancing lending in local and foreign currency with the Bank’s local and foreign currency resources. Management of Currency, Liquidity and Interest Rate risk is then reviewed on a monthly basis by the ALCO Committee and on at least a quarterly basis by the Risk Committee and Supervisory Boards.

With the increase in non-credit operations, anti-money laundering and anti-terrorist financing procedures become even more important. AccessBank has adopted detailed procedures for managing both issues, which are centred on a strict KYC (Know Your Client) policy and which serve to protect the citizens and laws of Azerbaijan. The procedures have been prepared in accordance with FATF (Financial Action Task Force) and other international recommendations.

AccessBank’s business success is reliant on the bank’s IT systems for day-to-day operations and management information. All branches are connected online, and all business is fully integrated in a central database. This provides management with instant up-to-date information on all activities, available at any time at their desk-top PCs, contributing to management’s control capacities and risk management. This will be further strengthened with the introduction of the Temenos T24 system, which has been vetted throughout internationally respected banks over many years.
The efficacy of the control mechanisms and Risk Management in AccessBank is subject to constant review by the Internal Audit Function. By 2010-end, the Audit Department numbered nine full-time staff who audited each branch and Head Office department twice per year. The work of the department is led and supported by the Audit Committee which reports directly to both the Supervisory Board and the General Assembly of Shareholders.
The technical development of Risk Management in the bank is also supported by business risk and audit specialists in Berlin, from LFS, at the AccessHolding level.

 

For more information please download this file:  risk management.pdf