What are the areas where the activities of RMD are segregated? Mention some important tasks of these areas.
The Risk Management Division (RMD) is divided into specialized desks. Each desk focuses on a specific type of risk. This makes risk monitoring more focused and effective.
Credit Risk Desk
This desk assists in the formulation and review of credit risk management policies, guidelines, and manuals. It sets up credit risk appetite, limits, tolerance, and MAT with due consideration for sector, industry, geographical location, and regulatory limits.
It monitors the loan portfolio to ensure good quality asset growth. It closely monitors stressed loans, NPLs, SMA loans, overdue loans, law suit cases, written-off loans, collateral against loans, and credit ratings of borrowers. It also conducts Stress Testing to assess the shock resilience capacity of the bank.
Market Risk Desk:
This desk ensures that the treasury department calculates interest-sensitive assets and liabilities properly for determining the impact of interest rate fluctuations on profitability. It measures interest rate risk using tools such as sensitivity analysis and duration gap analysis.
It monitors foreign exchange-related risks — exchange rate risk, FX-related limits, repatriation of export proceeds, outstanding overdue accepted bills, and reconciliation of long-pending Nostro account transactions. It measures equity price risk using tools like VaR and also conducts Stress Testing.
Liquidity Risk Desk:
This desk ensures the treasury department prepares the Structural Liquidity Profile, projected sources and uses of funds, and calculates all regulatory liquidity ratios such as CRR, SLR, ADR, LCR, NSFR, MCO, and WBG. It regularly monitors liquidity ratios, liability concentration, and growth of assets and liabilities. It plays a major role in setting liquidity strategy and assesses opportunity losses from improper liquidity management. It also conducts Stress Testing.
Operational Risk Desk:
This desk identifies vulnerable areas related to operational risk in collaboration with ICC. It advises senior management and the Board to review existing policies to prevent recurrences of unexpected incidents. It assists in managing risks related to lapses in people, processes, and systems. It monitors unsettled issues — identified fraud, forgeries, and major irregularities — through ICC. It plays an important role in upholding the reputation of the bank by minimizing operational risks.
Risk Research and Policy Development Desk:
This desk develops, tests, and uses different models — such as VaR, Collection Scoring, and Vintage Curve — for measuring and assessing risks. It reviews the effectiveness of the enterprise-wide risk governance framework and recommends necessary policy measures. It conducts research to explore the reasons behind identified risks and suggests probable ways to control them.
It explores emerging risks and recommends preventive measures. It prepares a consolidated Risk Appetite Statement (RAS) and develops the KRI reporting format. It submits quarterly KRI summaries to the BRMC.
