Page 34 - CCB_Annual Report_2022

34 Strategic Report 35

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