Risk management policy is a key element of the bank’s internal control system. Risk management system is an interconnected and integrated system. Risk management policy is subject to Ameriabank Board of Directors’ approval. The Risk Management Center is in charge of elaboration of the risk management policy, structure and implementation thereof. Internal Audit Service is in charge of assessing the bank’s risk management system efficiency and reporting to the bank’s Management and Board of Directors.
Ameriabank CJSC has adopted best practices for environmental and social risk management implementing an E&S risk management system.
The key elements of environmental and social risk management system (ESMS) are:
- Environmental and Social Risk Management Policy
- Environmental and Social Risk Management Instruction
- Tools required for introduction and implementation of the process
The Bank is working with its clients to make sure that they run their business in an environmentally and socially conscious manner and helps them comply with the respective requirements and implement E&S management practices consistent with their business.
The E&S risk management practices are an integral component of our corporate governance system and play an important role in the sustainable finance development.
Ameriabank has developed a Green Bond Policy which details the Green Bond Framework of the Bank, including use of proceeds, project evaluation and selection process, management of proceeds, reporting and external review matters, as well as the roles and duties of structural subdivisions engaged in the green bond issue, placement and respective reporting.
Eligible green assets cover the assets under the Bank’s portfolio projects reducing greenhouse gas emissions and falling into the following categories:
- Renewable energy
- Energy transmission, distribution and storage
- Sustainable transport
- Sustainable buildings
- Land use and aquatic resources
- Energy and resource efficiency in industry
- Waste management
- IT solutions
Environmental and social risks are managed by dedicated E&S Risk Managers under the Risk Management Department ensuring implementation and application of the system.
Credit risk is the risk of loss of loans or other assets, which is likely to occur when the counterparty is unable or unwilling to meet an obligation. Subject to minimum requirements of credit risk management the bank defines its target markets, including the acceptable types of lending, benchmark structure, profitability and maturity of loan portfolio, credit limits per amount, term, interest rate and types of the loan and forms of control over the pledged collateral, etc.
Market risk is the risk/probability of losses in investment value influenced by market factors. Market risks include price risks, interest rate risks and currency risks.
Ameriabank manages the market risks by defining ‘Stop Loss’ and ‘VaR’ limits aimed at mitigating interest rate risks. The bank clearly defines also the objectives and strategy of investment activities by setting limits as per the security rating.
Operational risk is the risk of loss resulting from failure or malfunctioning of internal processes and systems; human factor, or external events.
The bank’s management at all structural levels is responsible for identification and management of operational risks.
We manage the internal operational risks through
- clear and documented description of all business-processes,
- elaboration of internal legal acts regulating the business processes,
- definition of relevant limits for all business processes and operations,
- application of four-eyes principle for each and any transaction executed by the bank,
- definition of the reporting mechanism, frequency and types of reports, etc.