CBI’s Risk Group is responsible for managing all areas of risk associated with the bank. The Chief Risk Officer (CRO) has overall responsibility for the bank’s risk profile and for reviewing risk across various categories on an organisation-wide basis.
CBI has a robust enterprise risk management framework which identifies, measures, controls and reports all associated risks and ensures the Bank operates within its Risk Appetite. Our Board of Directors is responsible for the oversight of the risk management framework across CBI. Risk governance is supported by management and board level risk committees, who in turn define relevant risks to the organisation (both financial and non-financial risks, including capital, credit, market, liquidity, operational, compliance, strategic andreputational).
The Bank is exposed to credit risk through its various lending activities, including funded and non-funded facilities. CBI’s credit risk management process is independent of the business to protect the integrity of the credit decisions and risk assessment process.
CBI has tailored credit approval processes to suit the customer, product, sector and exposure types. The Risk Group’s Credit Policiesreviewed frequently to ensure up to date guidelines for new credit approvals, renewals or changes in the existing terms and conditions of the previously approved credit policies. The Bank has a dedicated team of experienced credit professionals who identify risk at an early stage and take proactive measures to minimise the impact.
A variety of tools, including notional limits, sensitivity measures and scenarios are considered for measuring such market risks. The Board of Directors sets a Risk Appetite and risk limits which are closely monitored by the Risk Group, reported frequently to Senior Management and discussed monthly by ALCO.
The objectives of the Operational Risk group are to develop a common understanding and awareness of operational risk across CBI, including cyber risk and fraud ; ensure that there is a clear understanding of responsibility and accountability in managing and mitigating operational risk; improve internal controls and reduce the probability and potential impact of losses; maintain an operational loss database; and improve the risk and control culture across the bank. We have end-to-end operational risk software to manage qualitative and quantitative operational risk data.
Capital Management is an ongoing process of ensuring adequate capital is available to meet regulatory and internal capital requirements and ensure optimum capital usage. The Bank has implemented a dedicated capital management system which calculates the capital adequacy ratio in compliance with CBUAE and Basel II guidelines. Using this system, exposures are measured at the most granular level so that account level data is correctly used for calculation of risk weights, credit conversions and allocation of credit risk mitigation. CBI has also adopted the Basel II Standardised Approach to measure regulatory capital requirement, on credit risk and market risk. For operational risk, the regulatory capital requirement is calculated based on the Basic Indicator Approach. CBI has adopted the "Pillar I Plus" approach for ICAAP where the bank can assess the additional capital requirements on the Pillar 2 risks like credit concentration risk, interest rate risk and other risks relevant to CBI. This also includes the capital charge estimations resulting from stress testing.