{"id":12793,"date":"2020-05-13T11:20:31","date_gmt":"2020-05-13T04:50:31","guid":{"rendered":"http:\/\/www.uabdev.com.mm\/?page_id=12793"},"modified":"2025-01-13T09:39:27","modified_gmt":"2025-01-13T03:09:27","slug":"banking-risk","status":"publish","type":"page","link":"https:\/\/www.uab.com.mm\/mm\/governance\/risk-management\/banking-risk\/","title":{"rendered":"Banking Risk"},"content":{"rendered":"<div data-elementor-type=\"wp-page\" data-elementor-id=\"12793\" class=\"elementor elementor-12793\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-1a9bd8d elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"1a9bd8d\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-286e481\" data-id=\"286e481\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-55b2c08 elementor-widget elementor-widget-text-editor\" data-id=\"55b2c08\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span style=\"font-size: 14px; font-family: inherit;\"><span style=\"color: #111;\">About Us<\/span> \/ <a href=\"\/governance\">\u1021\u102f\u1015\u103a\u1001\u103b\u102f\u1015\u103a\u1019\u103e\u102f\u1005\u1014\u1005\u103a<\/a> \/ <a href=\"\/risk-management\">Risk Management<\/a> \/ <span style=\"color: #39b54a;\">Banking Risk<\/span><\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-a9267a5 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"a9267a5\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-c120f4b\" data-id=\"c120f4b\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-6f70754 elementor-widget elementor-widget-heading\" data-id=\"6f70754\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h3 class=\"elementor-heading-title elementor-size-default\">Banking Risk<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-5094f11 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"5094f11\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-5234b1f\" data-id=\"5234b1f\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-718554f elementor-widget elementor-widget-html\" data-id=\"718554f\" data-element_type=\"widget\" data-widget_type=\"html.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<style>\n   \ntable {\n   \n  border-collapse: collapse;\n  width: 100%;\n  text-align: left;\n  font-size: 14px;\n}\n\n.padtable1{\n    width: 50%;\n}\n.bankrisktb{\n    vertical-align: top;\n    padding: 10px; \n    border: 1px solid!important;\n        \n    }\n    \n<\/style>\n<div style=\"overflow-x:auto;\">\n<table>\n\t<tr class=\"bankrisktb\">\n\t\t<th class=\"bankrisktb\">Risk<\/th>\n\t\t<th class=\"bankrisktb\">Description<\/th>\n\t\t<th class=\"bankrisktb\">Mitigation<\/th>\n\t<\/tr>\n\t<tr class=\"bankrisktb\">\n\t\t<th class=\"bankrisktb\">Credit<\/th>\n\t\t<td class=\"bankrisktb\">Credit risk is the risk of non-repayment and consequential financial loss suffered by the bank. The credit risk is further classified into credit default risk and concentration risk.<br\/>\n\n<b>Credit Default Risk<\/b>: It is the risk emanating from the borrowers due to non-repayment beyond scheduled days.<br\/>\n\n<b>Concentration Risk<\/b>: It is the risk emanating when the banks\u2019 loan portfolio is concentration into the segment.<br\/>\nCredit Default Risk arises due to failure by the borrower to repay the amount. The reasons for such non-payment can range from deteriorating financial health of the borrower to borrower\u2019s diversion of the fund.<br\/>\nThe concentration risk arises when bank concentrates loan assets into a segment. When a segment experiences a headwind, the concentration risk materialises (i.e. bank experiences significant individual defaults in that segment)\n\t<\/td>\n\t<td class=\"bankrisktb\">\n\t<ul>\n\t\t<li>Implementation of detailed Credit Risk Policy covering acceptability and lending terms of various business<\/li>\n\t\t<li>Obtaining charge over assets such as cash, premises, stocks and debtors<\/li>\n\t\t<li>Obtaining personal guarantees from owners and directors<\/li>\n\t<\/ul>\n\t<\/td>\n\t<\/tr>\n\t<tr class=\"bankrisktb\">\n\t\t<th class=\"bankrisktb\">Liquidity<\/th>\n\t\t<td class=\"bankrisktb\">The balance sheet of the bank is structurally imbalanced, i.e. the term of a major chunk of assets are longer than the terms of funding liabilities. Thus, during the time of stress, the bank may not be able to meet the liability requirements. This can sometimes lead to the bank being insolvent.<\/td>\n\t\t<td class=\"bankrisktb\">\n\t\t\t<ul>\n\t\t\t\t<li>Maintaining sufficient high-quality liquid assets<\/li>\n\t\t\t\t<li>Increasing the term of deposits through instruments such as fixed deposits<\/li>\n\t\t\t<\/ul>\n\n\t\t<\/td>\n\t<\/tr>\n\t<tr class=\"bankrisktb\">\n\t\t<th class=\"bankrisktb\">\u1005\u100a\u103a\u1038\u1000\u1019\u103a\u1038\u101c\u102d\u102f\u1000\u103a\u1014\u102c\u1001\u103c\u1004\u103a\u1038<\/th>\n\t\t<td class=\"bankrisktb\" style=\"vertical-align: top;\">The banking industry is a heavily regulated industry and in the past ten years more so. The continually changing regulations require the bank to invest in significantly in the compliance area to avoid being penalised for non-compliance.<\/td>\n\t\t<td class=\"bankrisktb\">\n\t\t\t<ul><li>Development of compliance risk policies and procedures<\/li>\n\t\t\t<li>Regular compliance monitoring and testing by the internal audit function<\/li>\n\t\t\t<li>Identification of reporting requirements and development of dashboards<\/li>\n\t\t\t<li>Regular compliance-related training to relevant staffs<\/li>\n\t\t\t<\/ul>\n\t\t<\/td>\n\t<\/tr>\n\t<tr class=\"bankrisktb\">\n\t\t<th class=\"bankrisktb\">Operational<\/th>\n\t\t<td class=\"bankrisktb\">Operational risk arises due to failed internal controls, people and systems or due to external events.  Due to activities such as fraud, limit breaches, systems failures banks suffer heavy losses annually.<\/td>\n\t\t<td class=\"bankrisktb\">\n\t\t\t<ul><li>Set up of strong internal controls<\/li>\n\t\t\t<li>Strengthened three lines of defences through regular subject matter training<\/li>\n\t\t\t<li>Development of business continuity plans and BIA when the risk materialises<\/li>\n\t\t\t<li>Maintaining recovery sites<\/li><\/ul>\n\t\t<\/td>\n\t<\/tr>\n\t<tr class=\"bankrisktb\">\n\t\t<th class=\"bankrisktb\">Market<\/th>\n\t\t<td class=\"bankrisktb\">Market risk is the risk of loss arising due to adverse price movements in the on and off-balance sheet instruments. The market risk can be further classified into trading and non-trading risk.  The risk of loss increases due to adverse movement in interest rates, credit spreads, prices of equities et al.<\/td>\n\t\t<td class=\"bankrisktb\"><ul>\n\t\t    <li>Diversification of sources and sectors of deposits and loans to reduce concentration<\/li>\n\t\t    <li>Maintaining a prescribed Net Open Limit for Foreign Currency exposure<\/li>\n\t\t\t<li>Stress testing to detect weaknesses<\/li>\n\t\t<\/ul>\n<\/td>\n\t<\/tr>\n\t<tr class=\"bankrisktb\">\n\t\t<th class=\"bankrisktb\">ESG<\/th>\n\t\t<td class=\"bankrisktb\">ESG risk is the risk of potential negative impacts on an organisation\u2019s financial performance, reputation, or long-term sustainability arising from environmental, social, and governance issues. These include factors like climate change, inequality, regulatory non-compliance, and governance failures, which can affect operations, stakeholders, and the broader community.<\/td>\n\t\t<td class=\"bankrisktb\"><ul>\n\t\t    <li>Identify and address critical ESG risks in the Bank\u2019s processes including (but not limited to) lending, human resources, procurement and energy utilisation.<\/li>\n\t\t    <li>Align sustainability and the Bank\u2019s business strategies and incorporate ESG concerns into strategies for responsible lending, transparent reporting, and sustainable financing.<\/li>\n\t\t\t<li>Adopt stakeholder management and foster awareness amongst stakeholders for inclusive economic growth to support Myanmar's sustainable development goals by promoting environmental stewardship and long-term economic stability.<\/li>\n\t\t<\/ul>\n<\/td>\n\t<\/tr>\n<\/table>\n<\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-474a32f elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"474a32f\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-28fffed\" data-id=\"28fffed\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-644f3d0 elementor-widget elementor-widget-spacer\" data-id=\"644f3d0\" data-element_type=\"widget\" data-widget_type=\"spacer.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-spacer\">\n\t\t\t<div class=\"elementor-spacer-inner\"><\/div>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>","protected":false},"excerpt":{"rendered":"<p>About Us \/ Governance \/ Risk Management \/ Banking Risk Banking &#8230; 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