PSBank Takes Proactive Approach to Risk Management

Philippine Savings Bank (PSBank) has reinforced its commitment to ensuring the stability and sustainability of its operations by implementing a robust risk management framework that aligns with its low tolerance for market, operational, technology, legal, regulatory, strategic, and reputational risks.

Managing Risks Effectively

To strengthen its risk posture, PSBank has put in place various measures to mitigate potential losses. These include:

• Stop-loss limits
• Loss triggers
• Value-at-Risk (VaR) limits
• Position limits to manage foreign exchange risks
• Sensitivity gap models to estimate earnings-at-risk
• Stress testing analysis to assess interest rate exposure

Ensuring Liquidity

To ensure liquidity, PSBank has developed a Liquidity Contingency Funding Plan that helps anticipate and respond to potential liquidity crises. The bank also:

• Monitors its High Quality Liquid Assets (HQLA)
• Net cash outflows
• Maintains a sufficient liquidity buffer

Managing Operational Risk

Operational risk is managed through a strong “control culture” that emphasizes:

• Prudential use of technology
• Effective internal controls
• Continuous self-improvement

PSBank’s Board-approved organizational chart clearly establishes areas of management responsibility and accountability, while its Internal Audit Group provides independent assurance on control adequacy and compliance.

Mitigating Technology Risk

Technology risk is mitigated through:

• Investments in information technology
• Advanced management information systems
• Regular testing and auditing standards

PSBank also ensures that it identifies and quantifies risks to the greatest extent possible and establishes standards and controls to manage technology-associated risks.

Managing Legal, Regulatory, Strategic, and Reputational Risks

In addition to operational and technology risks, PSBank has a low tolerance for:

• Legal risks, which are managed through a legal review process that ensures contracts, documentation, and activities adequately protect its interests and comply with applicable laws and regulations
• Regulatory risk, which is addressed through a culture of compliance and continuous updates to policies and frameworks
• Strategic risk, which is managed through the utilization of tangible and intangible resources to carry out business strategies and meet long-term goals
• Reputational risk, which is managed through an abundance of caution when dealing with customers and communities

Conclusion

By taking a proactive approach to risk management, PSBank demonstrates its commitment to maintaining the trust and confidence of its customers, investors, and regulators.