ECCB 2016/2017 Annual Report

ECCB ANNUAL REPORT 2016/2017

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The Office of Risk Management was established to implement an Enterprise Risk Management Framework. A Chief Risk Officer was appointed in September 2016, to lead this initiative.

OFFICE OF RISK MANAGEMENT The international financial landscape has undergone significant changes in recent years which have heightened the importance of robust risk management regimes within organisations to mitigate the attendant risks in the global operating environment. Traditional risk management practices, where risk was primarily viewed as a series of single elements to be addressed individually, gave rise to the creation of silos within organisations and detracted from the overall achievement of strategic objectives. In response to these shortcomings, companies have adopted an Enterprise Risk Management approach. The intention is to develop a holistic view of the most significant risks that can deter or otherwise negatively impact the achievement of the entity’s key objectives. In response to this paradigm shift, an Office of Risk Management was established to implement an Enterprise Risk Management Framework. A Chief Risk Officer was appointed in September 2016 to lead this initiative. This separation of the risk function is in line with international best practices and facilitates greater efficiency in meeting the Bank’s objectives. This new focus on risk management extends to the Board of Directors. Consequently, the role of the Board Audit Committee was expanded to include oversight of the Enterprise Risk Management functions and the Charter was updated to reflect the added responsibilities. The Board Audit subcommittee was

renamed the Board Audit and Risk Committee, (BARC) indicative of the increased focus.

As part of the mandate for the development of the Enterprise Risk Management Framework, the Chief Risk Officer has responsibility for leading various initiatives including: •  • The development of a concise Risk Appetite Statement with clearly defined risk tolerances to guide the risk management operations throughout the Bank. This would be supported by clearly defined roles within the governance structure to support the Risk Management Framework at all levels including, Board of Directors, Executive Committee, Department Heads, management and operational staff; •  • Oversight of the Disaster Recovery and Business Continuity Management Programme; •  • Facilitating training sessions in riskmanagement at all levels; and •  • The development and implementation of appropriate tools and methodologies for risk measurement and reporting. In formulating the Bank’s Risk Appetite, requisite attention is given to the inherent risks associated with the broad areas of monetary policy, financial sector stability, management of the Payment and Settlements System and the daily operational tasks undertaken to support these functions.