Karafarin Bank decided to establish the Risk Management Department in 2005. This Department is responsible for implementation of latest methods for measuring and managing indigenous banking risks.
In the last three years the Department has done extensive research, which covers three areas of credit risk, market risk and operational risk.
Part of the above research has been accomplished and is currently being used for measuring banking risks and the results are reported to the Board of Directors periodically. Also according to an agreement between KB and International Finance Corporation (IFC), a subsidiary of the World Bank, the Bank consulted a group of international experts for implementation of risk management inside KB. The group has confirmed the validity of the methodology used for risk measurement and also provided the Department with some useful guidelines in order to strengthen the risk management process.
On this basis, the most important steps to be taken by the Risk Management Department in the next year will be:
- Accomplishment and implementation of operational risk measurement;
- Designing a structure to monitor and manage liquidity and Asset and Liability Management;
- Working with senior management for creating an Asset and Liability Management Committee (ALCO);
- Working with credit committees in order to utilize client credit ratings in the credit assessment process;
- Working with the Board of Directors to create the Risk Management Committee inside the board and defining duties and policies for it;
- Implementation of Basel II standard inside the bank.
The full report about the latest status of KB risks will be presented comprehensively to our shareholders in the Annual Report of the bank.