Financial Crime World

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Risk Management Framework and Governance Structure

VP Bank Group, a financial institution, has implemented a robust risk management framework and governance structure to identify, assess, measure, monitor, and manage risks across different categories. This framework involves various committees, units, and roles that work together to ensure the bank operates within acceptable risk levels.

Risk Management Governance

The Board of Directors sets the overall risk appetite and strategy for VP Bank Group. Group Executive Management is responsible for implementing the risk policy and ensuring functional capability of the risk management process.

Committees

VP Bank Group has established several committees to oversee various aspects of risk management:

  • Group Risk Committee (GRC): Oversees the implementation of the risk strategy within defined limits and targets.
  • Asset & Liability Committee (ALCO): Manages market and liquidity risks, balance sheet management, and regulatory compliance.
  • Data and Process Risk Committee (DPRC): Focuses on business process maps, internal controls, external risks, crisis management, data security, IT risks, operational risks, and reputational risks.
  • Group Credit Committee (GCC): Handles credit risk management within delegated competences.
  • Group Compliance Risk Committee (GCRC): Proactively manages compliance risks, identifies primary risks, and ensures adherence to risk-mitigating controls.

Risk Management Units

VP Bank Group has established several units to manage various types of risks:

  • Group Treasury & Execution (GTR): Manages financial risks, including market risks, non-traditional assets risks, liquidity risks, and credit risks from a portfolio perspective.
  • Credit Risk Consulting (CRQ): The first line of defence for credit risk assessment and approval within the Group level.
  • Group Credit Risk (CCC): The second line of defence for large individual credit risks, providing oversight and ensuring adherence to policies.

Risk Management Process

The risk management process at VP Bank Group involves several key steps:

Determination of Risk Strategies

Derived from VP Bank’s business strategy, outlining the framework conditions for risk management.

Determining Risk Coverage Potential and Setting Tolerance

Based on both regulatory and value-oriented perspectives, determining limits and objectives for a rolling risk horizon of one year.

Risk Identification (Inventory)

Ensuring all significant risks are identified using quantitative and qualitative criteria.

Risk Measurement

Assessing eligible equity and committed capital from a regulatory viewpoint and net economic value of equity capital after deducting operating and risk costs from a value-oriented perspective.

Assessment of Risk-Bearing Capacity

Determining the available risk coverage potential, comparing it with all significant risks, and validating through both perspectives.

This comprehensive framework ensures that VP Bank Group operates within acceptable risk levels, maintains its solvency, and continues as a going concern.