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ECCB ANNUAL REPORT 2016/2017
EASTERN CARIBBEAN CENTRAL BANK
NOTES TO THE FINANCIAL STATEMENTS
(expressed in Eastern Caribbean dollars)
March 31, 2017
Eastern Caribbean Central Bank
Notes to the Financial Statements
March 31, 2017
(expressed in Eastern Caribbean dollars)
3. Financial risk management
…
continued
h) Operational risk
…
continued
Managing operational risk in the Bank is seen as an integral part of day-to-day operations and
management, which includes explicit consideration of both the opportunities and the risks of all
business activities. The Bank’s objective is to manage operational risk so as to balance an avoidance
of financial losses and damage to the Bank’s reputation with overall cost effectiveness and to avoid
control procedures that restrict initiative and creativity.
The primary responsibility for the development and implementation of controls to address
operational risk is assigned to the management team of each department. This responsibility is
supported by bank-wide corporate policies which describe the standard of conduct required of staff
and specific internal control systems designed around the particular characteristics of various Bank
activities.
Compliance with corporate policies and departmental control systems are managed by:
-
Requirements for appropriate segregation of duties, including the independent authorisation
of transactions;
-
Requirements for the reconciliation and monitoring of transactions;
-
Compliance with regulatory and other legal requirements;
-
Documentation of controls and procedures;
-
Requirements for the periodic assessment of operational risks faced, and the adequacy of the
controls and procedures to assess the risks identified;
-
Development and periodic testing of contingency plans;
-
Training and professional development;
-
Ethical and business standards;
-
Risk mitigation, including insurance where it is effective;
-
Weekly reporting to the senior management/risk management committee;
-
Quarterly management affirmation by each department’s surveillance
officer that corporate
policies and departmental internal control systems have been complied with; and
-
A structured induction program for new employees.
Compliance with the Bank’s standards is supported by a programme of periodic reviews
undertaken by the Internal Audit Department. The results of the reviews are discussed with the
management of the department to which they relate and summaries are submitted to the Board
Audit and Risk Committee and Executive Committee of the Bank.