Page 35 - CCB_Full-Annual-Report-2021

34 Strategic Report 35

Contents
Contents

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

Credit Credit Risk The Bank has a moderate ∞Regular modelling of Credit Risk Legal, Compliance The Bank maintains a ∞Provision of guidance Ensuring Strategic Report
Management appetite for Credit Risk funding requirements is one of the Compliance & Framework low appetite for Legal, in relation to business, compliance
The risk that Framework overall, maintaining and interest rate principal risks Regulatory Compliance and Regulatory product, and change with all
counterparties conservative parameters, risk analysis that the Bank Compliance Risk. Whilst we recognise management requests applicable
fail to meet the Lending including a maximum LTV and faces, given The risk Monitoring that operational errors can regulatory
commitments Protocols a DSCR at a higher level than ∞Compliance with the nature of that non- Framework occur, we maintain zero ∞Ensuring appropriate requirements in
into which they Credit PRA requirements, focusing detailed Risk Appetite its business. compliance Risk tolerance for reportable registrations under the a fast-changing
have entered Committee on relationship management, and Lending Protocol The lending with laws or Management breaches of regulations, Senior Management landscape is
in a timely including annual reviews. parameters portfolio regulations Committee regulatory policy breaches, and Certification a challenge
manner. Risk & ∞Quarterly Stress Testing is closely could give breaches of applicable laws, Regime through to which the
Compliance We will maintain the Bank’s of the loan portfolio monitored rise to fines, Risk & late responses to regulatory second line oversight Bank devotes
Committee litigation, Compliance
lending distribution and via a suite Committee requests or gifts/hospitality ∞Maintaining logs of considerable Corporate Governance Statement
Environmental, product offering within ∞Segregation of of detailed sanctions, policy breaches. We strive to internal compliance resources,
Social & parameters agreed by the responsibility for metrics, reputational ensure that we always remain breaches, regulatory and the
Governance Board, diversified by sector the management of including damage or within the law and regulation. breaches & conflicts Compliance
loans and a program
(ESG) and UK region, with a minimal of underwriting from Concentration, financial loss. Regulatory Changes (Horizon of interest Framework
Committee appetite for ‘speculative’ business development Breaches and Scanning) are logged, is continually
lending. These ensure that we Exceptions, allocated, monitored, and ∞Horizon scanning under review
Model Risk and sales Asset Quality to ensure continued to ensure that
Oversight concentrate lending on areas ∞Use of seasoned and Treasury tracked ensuring additions adherence to regulatory it meets all
Committee where we have experienced to or changes within requirements &
subject matter experts both professionals with Counterparty regulatory requirements developments requirements
in the first and second line of deep subject matter Indicators, and are proportionately applied. and is in line
defence, with the necessary expertise, experience, via the use of All material breaches are ∞Regular reviews of with leading
operational capacity, and ongoing training credit grading investigated and reported training content & industry
systems, and infrastructure ∞Quality Assurance models. Stress to the Risk & Compliance oversight of the training practices. Independent Auditor’s Report
to effectively manage and checks to ensure testing is Committee in a timely & development of
monitor the loans through adherence to policies employed to manner, rule changes staff to ensure up to
their life cycle. We will operate and procedures ensure that are implemented within date knowledge base
within protocols, underwriting sufficient the applicable regulatory
guidelines, exception limits ∞ Use of the Credit capital is timelines and staff operate
and regulatory guidelines Grading Models as part maintained. within the Bank’s documented
and manage the Early of the approval process, policies and controls
Warning Report and Watch refreshed monthly, The Bank and, where applicable,
List proactively to ensure allowing the portfolio continues to industry guidelines.
that asset quality remains to be monitored on assess the
satisfactory. We will not an ongoing basis. potential
chase growth at the expense ∞Conducting annual impact of Financial Statements
of credit and asset quality. reviews to ensure climate change
Although we recognise that monitoring throughout and the
through the full economic the facility lifecycle environmental
cycle, some credit losses factors
are inevitable, our robust ∞Close monitoring across its
underwriting standards aim of non-performing loan portfolio
to minimise them, with close loans, including Early as well as
monitoring of risk appetite Warning Report, Watch undertaking
on a monthly basis via the List, Forbearance, and appropriate
comprehensive suite of KRIs. management of arrears stress testing.

∞Detailed provisioning Notes to the Financial Statements
requirements and
procedures