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Our Performance Sustainability Statement Governance Our Numbers Other Information

46. FINANCIAL rISk MANAGEMENT OBJECTIvES AND POLICIES (CONT’D.)
risk governance (cont’d.)

There are other risk committees set up at the Management level to oversee specific risk areas and control function of which the
following are the details:

Committee Objective
Asset & Liability working Committee (“ALCO”) To ensure all strategies conform to the Bank’s risk appetite and
levels of exposure as determined by BRMC. These include areas
of capital management, funding and liquidity management and
market risk.
Credit Committee ("CC") To manage the direction of the Bank's large financing exposure
(business and consumer). These include authority to decide on
new and/or additional exposures and review the direction of
existing exposure.
Investment Committee (“IC”) To manage the Bank’s investments and decides on new and/
or additional increases of existing investment securities and/or
other Treasury investment-related activities.
Operational risk Management Committee (“OrMC”) To ensure effective implementation of Operational Risk
Management Framework.

To carry out the day-to-day risk management functions, a dedicated Risk Management Department (“RMD”) that is
independent of profit and volume target, exists to support the above committees.

(a) Credit risk
Credit risk is defined as the potential loss to the Group and the Bank as a result of defaults in payment by counter
parties via financing and investment activities. The Group and the Bank comprehend that credit risk is inherent in its
credit products activities such as credit financing facilities activities (funded/non-funded facilities); treasury activities
(including inter-bank money market, money and capital trading, foreign exchange); and investment banking activities
(including underwriting of corporate sukuk issuance).
The Group’s and the Bank’s RMD and Senior Management via ERMC implement and execute the strategies and policies
in managing credit risk to ensure that the Bank’s exposure to credit are always kept within the Group’s and the Bank’s
risk appetite parameters, and the Group and the Bank to be able to identify its risk tolerance levels. The administration of
credit risk is governed by a full set of credit-related policies such as Credit Risk Policy (“CRP”), and Guidelines to Credit
Risk Policies (“GCRP”), product manuals and standard operating procedures.
Credit exposures are controlled via a thorough credit assessment process which include, among others, assessing the
adequacy of the identified source of payments and/or income generation from the customer, as well as determining the
appropriate structure for financing.
As a supporting tool for the assessment, the Group and the Bank adopt credit risk rating (internal/external) mechanisms.
The internal risk rating/grading mechanism is consistent with the nature, size and complexity of the Group’s and the
Bank’s activities. It is also in compliance with the regulatory authority’s requirements. Where applicable, the external
rating assessment will be applied. This is provided by more than one of the selected reputable External Credit Assessment
Institutions (“ECAI”).