Page 179 - Exim iar24_Ebook

EXIM BANK MALAYSIA ANNUAL REPORT 2024

7 FINANCIAL STATEMENTS 177
NOTES TO THE FINANCIAL STATEMENTS

42. FINANCIAL RISK MANAGEMENT POLICIES (cont’d)
The main areas of financial risks faced by the Group and the Bank and the policies are set out as follows: (cont’d)
b. Market risk

The Group’s and the Bank’s market risk arise due to changes foreign currency value which would lead to a decline in the
valuation of the Group’s and the Bank’s foreign currency base financial investment, derivatives and borrowings.
c. Asset liability management risk

Asset Liability Management (“ALM”) risk comprises:
(i) Interest rate risks

This refers to the exposure of the Group’s and the Bank’s financial conditions due to adverse movements in interest
rates to the banking book.

(ii) Liquidity risks
Defined as the risk of not being able to obtain sufficient funds in a timely manner at a reasonable cost to meet
financial commitments when due.

d. Credit risk
Credit risk is defined as risk due to uncertainty in the customers or the counterparties ability to meet its obligations or
failure to perform according to the terms and conditions of the credit-related contract.

Oversight and organisation
A stable enterprise-level organisational structure for risk management is necessary to ensure a uniform view of risk across the
Group and the Bank. It is also important to have clear roles and responsibilities defined for each functions.
The Board has the overall responsibility for understanding the risks undertaken by the Group and the Bank and ensuring that
the risks are properly managed.

While the Board is ultimately responsible for risk management of the Group and the Bank, it has entrusted the Board Risk
Committee (“BRC”) to carry out its functions. Although the responsibilities have been delegated, the Board still remains
accountable. BRC, which is chaired by an independent Director of the Board, oversees the overall management of all risks
covering credit risk management, country risk management, market risk management, asset liability management and
operational risk management.

Executions of the Board’s risk strategies and policies are the responsibilities of the Group’s and the Bank’s management
and the conduct of these functions are being exercised under a committee structure, namely Management Risk Committee
(“MRC”). The Chief Risk Officer (“CRO”) chairs MRC. The Committee focuses on the overall business strategies and daily
business operations of the Group and the Bank in respect of risk management.
To carry out the day-to-day risk management function, a dedicated RMD that is independent of profit and volume targets
supports the Committee. RMD reports functionally to the BRC and administratively to the President/Chief Executive Officer.