Opportunities Arising from this Risk Continuously refine prevailing credit processes and financing responsibly. Selectively grow the Bank’s portfolio to ensure sustainability and preserve asset quality. Explore new possible opportunities on credit onboarding and evaluation process to adapt to the dynamic changes in the market. Description Risk of potential losses to Group arising from inability of our customers to fulfil and repay its obligations under facilities granted by the Bank. Response and Mitigating Actions Maintain a robust and prudent credit risk policy as well as Risk Acceptance Criteria (RAC), risk tolerance and loss triggers to manage credit risk. Credit analysts independently review and constructively challenge credit evaluations by the business before submission to Management and Board Committees for approval. Regularly conduct independent post-credit reviews and post-mortem analyses to assess and maintain asset quality standards. Conduct granular risk analysis on consumer portfolio to ascertain its alignment with the business approved strategy and Board approved Risk Appetite Statement. Proactively and vigilantly manage accounts for early detection of red flags to prevent deterioration in asset quality in line with the Bank’s Watchlist Guidelines. Promptly and accurately report all exposures, non-compliances, and emerging risks to Management and Board Committees. How does this impact us? Deterioration in financial asset quality may impact the Group’s capital and profitability. CREDIT RISK Opportunities Arising from this Risk To introduce alternative solutions for customers to navigate the volatilities in the market. To be nimble in responding to changes in the market and lead changes where necessary to adapt to market volatilities. Description Risk of potential losses arising from adverse movements in market prices or rates such as interest rates, foreign exchange rates, credit spreads and any other activities undertaken by the Group in financial markets. Response and Mitigating Actions Maintain a robust market risk policy and limits based on best practices. Proactively assess, monitor, analyse, manage and report to ensure that market risk management aligns with the approved risk appetite. Proactively review all market risk controls and parameters in line with the Group’s business strategy and the current economic environment. Conduct regular and ad-hoc stress testing to identify potential risks and ensure the Group’s exposure remains within its risk tolerance. Promptly and accurately report all exposures, non-compliances, and emerging risks to Management and Board Committees. Keep abreast of market and regulatory developments which impact the Group’s liquidity risk metrics and make recommendations for suitable changes. How does this impact us? Market volatilities may cause fluctuations in Group’s asset value, profitability, and capital. MARKET RISK 56 Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2023 Key Risks and Mitigation
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