Management and Reporting

OUR BANK Risk management Management and Reporting

EXPERIENCE OVER 30+ YEARS

Protecting itself from the negative effects of the global economic crisis takes an important place in the activity of TuranBank. The bank attaches a special attention to Risk Management. For the purpose of improving the risk management activities in the bank, close cooperation was established with IFC, GARP and other international institutions, including ABTC.

Currently, the Risk management Department of "TuranBank" OJSC determines, evaluates, controls, monitors and manages all risks connected with the activities of all structural units of the bank.

TuranBank adhering to the standard European banking traditions classifies the risk management in the following hierarchical levels:

a) Strategic level: Here the risk management is carried out at the level of the Management Board and the Supervisory Board. At this level, risk management activities include determination and management of risks, development of strategies and policies depending on the nature and frequency of occurrence of risks and on the amount of the damage caused, establishment of adequate systems in cases of occurrence of risks, determination of tools for maintaining in the acceptable, i.e. manageable level.

b) Macro level: Here the risk management is usually carried out by the committees established by the management personnel of various structural units of the bank engaged in financial activity, in accordance with the risk strategy and policy of the bank.

c) Micro level: Here the risks are managed by the structural units of the bank engaged in financial activity, within the limits determined by the above mentioned levels.

	Risk reporting system
#	Name of report	Period of presenting
1	Monthly report on "Results of the analysis on all current risks of the Bank" performance	Member of the Management Board, Chief Risk Officer - every month
2	Report on "Results of the analysis on all current risks of the Bank" (credit, market, liquidity, operational and other risks)	Risk Management Committee - every month
3	Report on consetration in the loan portfolio	Management Board - monthly
4	Review of the risks to different products and business processes	Regularly
5	Report on "matters that are discussed in the Risk Management Committee"	Supervisory Board - on a quarterly basis

For the purpose of introduction of risk management in TuranBank, the procedures for determination, evaluation and management of various risks such as credit, operational liquidity and market risks have been developed and the corresponding risk management tools are applied.

Today, compared to the previous years, our bank has obtained certain achievements in Risk Management and improved the Risk Management System in accordance with the following aspects:

I. Structure of Risk Management

The Structure of the Risk management in the bank, being comprehensive and sensitive to risks that the bank maybe subject including the changes that may occur in the fields of business where the bank acts, is based on perfect risk management procedures and rules and includes the followings:

a) Determination, acknowledgment, evaluation, monitoring, reporting and control of the risks;

b) Management of risks by the structural units and the responsibilities of such structural units;

c) Availability of management information system transferring the information from operational level to management level;

d) Mechanism ensuring the efficiency of the system and procedures and their progressive changes.

II. Integrity in Risk Management

In Risk Management in the bank, the risk that the bank may be subject in the future due to the multilateral activity of the bank are analyzed in whole rather than separately, which to serve as a ground for preventing one risk from creating another one and maintaining the risk at controllable and manageable level.

III. Accountability in Risk Management

The activity of the structural units and persons participating in risk management in the bank is inspected by internal audit and risk monitoring departments. This is aimed at more efficient management of risks ensuring the accountability of such structural units and persons and preventing them from causing any damage to the bank.

IV. Evaluation and Measurement of Risks

Risks are measured by the risk management personnel of the bank, having certain analytical risk analysis skills, by means of various methods, models, mathematical tools and systems, in order to maintain them in a manageable level. During the evaluation of risks, the weight, frequency of occurrence, amount of the possible damage of the risks are taken into account and the management methods corresponding to nature of such risks are applied.

V. Independent View and Monitoring in Risk Management

In accordance with the risk management philosophy, as in the standard banking, in our bank the party - structural unit undertaking the risk and the structural unit determining, measuring and evaluating such risk are not the same unit. This structural unit, being a single independent unit with wide powers, properly hands over the result of its activity to the Management Board for making decisions on risk management, which ensures the proper management of risks.

VI. Emergency Planning

A risk management mechanism, enabling the bank to predetermine possible undesired circumstances in the activity of the bank, to determine all kinds of possible risks to occur in such circumstances, to carry out timely and efficient measures, to assess such circumstances in a regular basis and evaluate the possible negative effect of such circumstances on the activity of the bank, have been is established in the bank. This, in its turn, enables the bank to predetermine and mitigate the risks and retain them within manageable limits

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