Risk is an inherent part of all businesses and banking is no exception. It can affect the core functions of a bank, which may lead to operational and financial disasters. An efficient risk management approach can contribute to the betterment of operations in a bank, ultimately benefiting both internal and external beneficiaries of the bank.

Risk Framework

The risk framework describes delegations of authority through which the Board and its committees may delegate authority to management-level committees or executive officers. Such delegations may authorize certain decision-making and approval functions. There are two important sectors in IVBB that are in direct charge of risk analysis and proposing efficient ways to manage potential risks. The risk management office and risk management committees are in close contacts with the business and operational sectors of the bank to detect and manage potential risks faced by the bank. The procedure this committee takes to manage potential risks IVBB is exposed to is as follows:

· Identify risks

· Analyze risks

· Evaluate or rank risks

· Treat risks

· Monitor and review risks

Risk Management Governance

Risk management governance in IVBB is an indispensable part of its corporate governance framework aiming at effective managing of risks by identifying, monitoring, and controlling them. IVBB has already created s set of processes through which management identifies, analyzes, and, where necessary, responds appropriately to risks that might adversely affect realization of the IVBB’s business objectives. IVBB risk management governance is utterly in tandem with the core functions and strategies of the bank. The components of IVVB’s risk management governance include:

· Risk Culture

· Risk Appetite

· Risk Framework (ERM Framework)

The top management of IVBB utilizes the relevant risk management governance to:

· create and enhance risk culture,

· outline risk appetite and oversee its proper implementation,

· design risk framework (ERM framework) using four lines of defense.

The risk management office in IVBB is in charge of managing potential risks. It professionally and meticulously reviews and revises the risk management governance of IVBB on an annual basis according to the domestic risk management principles, the ones set by the CBI, and international principles, the ones set by BIS and Basel Committee on Banking Supervision. There is also a committee on risk management in IVBB that works in parallel and collaboratively with the risk management office on pertinent issues. The members of this committee come from the core offices of the bank. It devises efficient methods and procedures to manage diverse risks and measures potential risks such as liquidity, credit, or operational and financial risks. 

The following pyramid shows the risk management governance of IVBB:


To fully comply with the international and domestic standards including Basel Committee Principles and Committee of Sponsoring Organizations of the Treadway Commission (COSO), IVBB has clear ownership and accountability across four lines of defense which are tightly integrated into the management-level governance structure. The following chart depicts the components of the defense lines and their interlinking relations.

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