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Risk Management Report
From The BANK of Greenland
The following report outlines the main points of our risk management practices at The BANK of Greenland.
Risk Management Overview
We employ a comprehensive risk-based approach to manage our risks, including market risk, credit risk, operational risk, and liquidity risk. This approach enables us to identify, assess, and mitigate potential risks that may impact our business operations.
Market Risk
Our market risk exposure is comprised of:
- Interest Rate Risk: We have an interest rate risk in positions outside the trading portfolio, mainly due to fixed-rate assets.
- Equity Risk: We own shares in sector companies and other enterprises in Greenland. These shares are valued based on quarterly or semi-annual updates of their equity value.
Credit Risk
We assess credit risk through a thorough process that includes:
- Credit Scoring: Evaluating the creditworthiness of our customers
- Monitoring: Regularly reviewing our credit exposures to identify potential risks
- Management: Implementing strategies to mitigate credit risks and optimize returns
Operational Risk
To mitigate operational risks, we have implemented policies and procedures, including:
- Internal Controls: Establishing robust internal controls to prevent errors and irregularities
- Security Measures: Implementing security measures to protect our assets and sensitive information
- Business Continuity Planning: Developing plans to ensure continuity of operations in the event of disruptions
Liquidity Risk
We maintain liquidity buffers and manage our cash flows to ensure we can meet our short-term obligations. This includes:
- Maintaining Cash Reserves: Holding sufficient cash reserves to meet our immediate financial needs
- Managing Cash Flows: Effectively managing our cash inflows and outflows to avoid liquidity shortages
Gearing Risk (Leverage)
Our leverage ratio is calculated as a capital target for the core capital as a ratio of the unweighted exposures. We have determined that excessive leverage occurs at a leverage ratio below 10%. Our current total assets are approximately TDKK 7,949,566 and our total leverage ratio exposure is approximately TDKK 9,883,691.
Disclosure Requirements
We provide disclosure on various aspects of our risk management practices, including market risk, credit risk, operational risk, liquidity risk, and gearing risk. This transparency enables stakeholders to understand the risks associated with our business operations and make informed decisions.