Page 32 - CCB_Full-Annual-Report-2021

32 Strategic Report 33

The Bank’s principal risks and uncertainties Contents

Contents

Principal Risk Governance Risk Appetite Statement Key Mitigants Comments Principal Risk Governance Risk Appetite Statement Key Mitigants Comments

Total Risk Enterprise Risk The Bank takes a Monthly assessment The Bank Capital Capital The Bank maintains a ∞Maintaining a capital The Bank Strategic Report
Management conservative approach to by the Chief Risk monitors Adequacy Management low appetite for Capital surplus buffer maintains and
Total exposure Framework risk management, having Officer of the Bank’s its overall
to all types a low-risk appetite for all overall risk profile, risk profile The risk that Policy Adequacy Risk. Our priority exceeding minimum monitors a
of risk in Strategic Plan risk types, apart from Credit based on performance closely via its the Bank fails to Asset & is to maintain (via retained regulatory requirements robust capital
aggregate, hold sufficient Liabilities earnings) a capital surplus ∞Ongoing forecasting base, including
Risk Risk, for which its appetite against appetite in governance Committee above CET1 and Total Capital a management
Management is moderate, operating all risk categories. structure to capital to meet requirements sufficient to of capital requirements buffer more
Committee within strict parameters. ensure that it its regulatory Risk & absorb any unexpected losses reported to risk than regulatory
We recognise that there always remains obligations, Compliance and costs without using committees requirements
Risk & are certain types of risk within Risk support its Committee
Compliance to which it does not want Appetite, in growth plans regulatory buffers and ensure ∞Quarterly stress testing
Committee or to absorb Executive that the Bank’s capital base ∞Annual ICAAP,
any exposure (e.g. fraud), alignment with Committee can support a growing and Corporate Governance Statement
noting that instances can its strategy. shocks. maturing book throughout incorporating regular
and do occur. The Bank Board the economic cycle, allowing stress testing of the
therefore takes active steps for potential downturns. capital base in ‘severe
to minimise the possibilities yet plausible’ scenarios
of such incidents arising and ∞Horizon scanning
strives to mitigate the impact to ensure continued
when they happen, learning compliance with
from any mistakes made. regulatory requirements
Strategic Enterprise Risk The Bank maintains a low ∞Strategy debated at The Bank Liquidity & Asset-Liability The Bank maintains a low- ∞Measuring, managing, The Bank
Management appetite for Strategic Risk. We the Board’s Strategy has a clear Funding Management risk appetite for Liquidity & and monitoring the maintains
The risk of Framework aim to deliver a satisfactory Day, including 2nd strategy, which Policy
having an return on capital to our line challenge is monitored The risk of Funding Risk. We will maintain risk over appropriate and monitors
insufficiently Strategic Plan shareholders, generating effectively. being unable Savings sufficient liquid assets to time horizons, its liquidity Independent Auditor’s Report
defined or Risk profitable returns and building ∞Ongoing discussion to fund assets Protocols meet liabilities as they fall including intra-day and funding
flawed strategy Management gross lending balances, whilst at risk committees and meet Asset & due in a stressed scenario ∞Regular re-forecasting requirements
that does not Committee retaining stable asset quality and Board obligations Liabilities and maintain a buffer at all of the liquidity positions on a regular
adapt to market and maintaining a satisfactory ∞Regular employee, as they fall Committee times, including satisfactory basis, including
and business Risk & cost of risk. We will achieve broker, and due without liquidity coverage and loan to ∞Monitoring strict criteria intra-day risk
and maintains
developments Compliance this within our stated Risk customer surveys incurring Risk & deposit ratios. We will ensure over the use of High- sufficient
and/or meet the Committee Appetite and regulatory unacceptable Compliance that we are not overly reliant Quality Liquid Assets liquidity
requirements Executive guidelines and deliver market ∞Ongoing review of losses. Committee upon any single savings ∞Annual ILAAP, including headroom to
and Committee leading customer service, financial performance intermediary to raise deposits. stress testing of the ensure that
expectations demonstrated by above against budget liquidity base in ‘severe the Board’s
of our Board average new business margins ∞ Media monitoring/ yet plausible’ scenarios risk appetite
stakeholders. Financial Statements
and positive customer engagement ∞Horizon scanning and regulatory
experience. We aim to be an ∞Demonstrations of to ensure continued requirements
employer of choice, ensuring corporate social compliance with are met at
that we have the right mix of responsibility regulatory requirements all times.
skills and experience to grow Market Interest Rate ∞Scenario analysis Market Risk
the Bank. We work hard to Risk in the The Bank has no appetite is limited
protect our brand, minimising The risk that Bank Book for foreign currency risk and ∞Use of natural to Interest
reputational risk and play changes in Policy a low appetite for interest balance sheet hedges Rate Risk in
an active and responsible market rates rate and basis risk keeping and derivatives the Banking
part in our community. negatively Asset & all assets, liabilities and off- when needed Book, which
balance sheet exposures
impact the Liabilities in sterling and carefully ∞Monitoring of pipeline, is monitored
earnings or Committee managing mismatches repayment profiles and by the Bank’s Notes to the Financial Statements
market value Risk & between tenors of loans and product maturities. ALCO and a
of the Bank’s Compliance deposits, hedging exposures suite of Key
assets or Committee where necessary within ∞Modelling a variety of Risk Indicators
liabilities. different yield curves/
pre-determined limits. and tested
interest rate paths.
via scenario
analysis.