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CREDIT UNION SUPERVISION WORKSHOP KINGSTOWN, ST. VINCENT COURTNEY CHRISTIE-VEITCH FINANCIAL SECTOR SUPERVISOR, CARTAC AUGUST 20 - 22, 2014 Risk-based Supervision.

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Presentation on theme: "CREDIT UNION SUPERVISION WORKSHOP KINGSTOWN, ST. VINCENT COURTNEY CHRISTIE-VEITCH FINANCIAL SECTOR SUPERVISOR, CARTAC AUGUST 20 - 22, 2014 Risk-based Supervision."— Presentation transcript:

1 CREDIT UNION SUPERVISION WORKSHOP KINGSTOWN, ST. VINCENT COURTNEY CHRISTIE-VEITCH FINANCIAL SECTOR SUPERVISOR, CARTAC AUGUST , 2014 Risk-based Supervision for Credit Unions

2 Presentation Outline Background Significant Activities Materiality Inherent risks Quality of Risk Management Residual Risk

3 Presentation Outline Direction of Risk Capital Assessment Earnings Assessment Liquidity Assessment Composite Rating

4 Background: Role of Prudential Supervision To protect shareholders/depositors To enhance the integrity of the financial system To help maintain competitive markets and promote effective competition in the interests of consumers

5 Background: How Supervisors Carry Out Their Role The use of judgment in determining whether financial firms are safe and sound; provide appropriate protection for policyholders, depositors or investors Assess whether firms continue to meet prudential requirements. A judgment- based approach The assessment of firms not just against current risks, but also against those risks that could plausibly arise in the future. Use of Stress Testing and Scenario Analysis to assess risks A forward- looking approach Focus on those issues and those firms that pose the greatest risk to the stability of the financial system, depositors, investors and policyholders Allocate scarce resources to greatest areas of need. A risk-focused approach

6 The Essence of Risk Taking “Experience taught me a few things. One is to listen to your gut, no matter how good something sounds on paper. The second is that you're generally better off sticking with what you know. And the third is that sometimes your best investments are the ones you don't make.” Donald Trump

7 Rationale for Risk-based Approach Resources are not infinite / allocation of scarce resources Mechanism to prioritize work/on-sites – focus efforts on greatest risks Focus on risks to institution's aims and objectives Basis for justifying approach, action and decision Documented and consistent approach to risk management

8 Risk Management Stages Set Risk Appetite Risk Identification Risk Measurement Risk MitigationRisk Control Risk Monitoring and Reporting Decision to be Risk- based Set Risk Context

9 Step I: Identifying Significant Activities Line of business Business units Enterprise wide process e.g. information technology Activities can be identified from:  Organization structure  Strategic plans  Operational and Business plans  Capital allocations,  Financial reporting (internal/external)

10 Step II: Determining Materiality Assets generated by the activity relative to total asset size Revenue generated by activity in relation to total revenue Net income before tax/total net income before tax Risk weighted assets generated by activity / total RWA Capital allocation / total capital Strategic importance

11 Group Exercise # 1 Using the Annual Reports and Audited Financial Statements provided for the five Credit Unions,  Identify the significant activities  Determine materiality of the significant activity identified

12 Step III: Assess Inherent Risks Inherent risk is risk which cannot be segregated from the activity. It is intrinsic to an activity and arises from exposure to and uncertainty from potential future events. Inherent risks are evaluated by considering the degree of probability and the potential size of an adverse impact on an institution’s capital, liquidity or earnings.

13 Inherent Risk Assessment

14 Inherent Risk Framework - Traditional Business.EnvironBusiness.Environ O p e r a ti n g. E n v i r o n

15 Inherent Risk Framework - Revised Business.EnvironBusiness.Environ O p e r a ti n g. E n v i r o n

16 Inherent Risk Rating Low Low probability of a material adverse impact on an institution’s capital or earnings due to exposure and uncertainty from potential future events. Medium Low Lower than average probability of a material adverse impact on an institution’s capital or earnings due to exposure and uncertainty from potential future events. Moderate Average probability of a material adverse impact on an institution’s capital or earnings due to exposure and uncertainty from potential future events.

17 Inherent Risk Rating Medium High Higher than average probability of a material adverse impact on an institution’s capital or earnings due to exposure and uncertainty from potential events. High Higher than above average probability of a material adverse impact on an institution’s capital or earnings due to exposure and uncertainty from potential future events.

18 Assessing Inherent Risk The CAMELS Rating System Uniform Financial Institutions Rating System (UFIRS) Adopted by Federal Financial Institutions Examination Council (FFIEC) in 1979 Assesses six components of a deposit taking financial institution’s performance. Driven by both component and composite ratings Takes into consideration financial, managerial and compliance factors common to all financial institutions. Licensees evaluated in a uniformed and comprehensive manner Supervision attention appropriately focused on the financial institutions exhibiting financial and operational weaknesses or adverse trends.

19 Assessing Inherent Risk The CAMELS Rating System References to the CAMELS Rating System in this Presentation are based on the Office of the Comptroller of the Currency (OCC) On- site Process Handbook, updated September The CAMELS Rating System is:  Used to assess credit unions in the USA  Used by the majority of Financial Institution Regulators in the Caribbean  A risk assessment tool / not just a management or reporting tool as the PEARLS system

20 Objectives of the CAMELS Framework Review and assess the credit union’s capital adequacy framework Review and assess the quality of the credit union’s assets (with emphasis on investments and loans). Review and assess Governance/Board and Management Oversight Review and assess adequacy of earnings and the credit union’s profitability Review and assess the credit union’s liquidity status and adequacy of liquidity Review and assess the credit union’s sensitivity to market risks

21 Additional Risks Not Explicitly Considered by CAMELS Review and assess the credit union’s Operational risk management framework Review and assess concentration risks in the credit union’s operations (with emphasis on concentration risks in loans, share/savings and investments ). Review and assess reputation risk in the credit union Review and assess business strategy risk in the credit union

22 CAMELS Asset Quality Assessment Soundness of risk identification practices, credit underwriting standards and credit administration practices Level, distribution, severity and trend of problem, classified, non accrual, restructured, delinquent and nonperforming assets (on and off balance sheet)

23 CAMELS Asset Quality Assessment Adequacy of allowances for loans and lease losses and other valuation reserves Credit risks arising from or induced by off-balance sheet transactions, e.g. unfunded commitments, credit derivatives, commercial and standby letters of credit and lines of credit.

24 CAMELS Asset Quality Assessment Diversification and quality of the loan and investment portfolio Extent of securities underwriting activities and exposures to counterparties in trading activities Existence of asset concentration

25 CAMELS Asset Quality Assessment Ability of management to properly administer its assets, including timely identification and collection of problem assets Adequacy of internal controls and management information systems Volume and nature of credit documentation exception.

26 Asset Quality Rating Strong asset quality and credit administration practices. Identified weaknesses are minor in nature and risk exposure is modest in relation to the capital protection and management’s abilities. Asset quality is of minimum supervisory concern 1 Satisfactory asset quality and credit administration practices. The level and severity of classifications and other weaknesses warrant a limited level of supervisory attention. Risk exposure is commensurate with capital protection and management's abilities. 2

27 Asset Quality Rating Asset quality or credit administration practices are less than satisfactory. Trends may be stable or indicate deterioration in asset quality or increased risk exposure Level and severity of classified assets, other weaknesses and risks require an elevated level of supervisory concern. A general need to improve credit administration and risk management practices. 3 Deficient asset quality or credit administration practices. The levels of risk and problem assets are significant, and inadequately controlled, and they subject the financial institution to potential losses that, if left unchecked, may threaten its viability. 4 Critically deficient asset quality or credit administration practices that present an imminent threat to the institution’s viability. 5

28 CAMELS Sensitivity to Market Risk Assessment Sensitivity of earnings or the economic value of capital to adverse changes in interest rate, foreign exchange rates, commodity prices or equity prices The ability of management to identify, measure, monitor and control exposure to market risk given the size, complexity and risk profile of the FI

29 CAMELS Sensitivity to Market Risk Assessment The nature and complexity of interest rate risk exposure arising from non trading positions The nature and complexity of market risk exposure arising from trading, asset management activities and foreign exchange operations

30 CAMELS Sensitivity to Market Risk Rating Market risk sensitivity is well controlled Minimal potential that earnings performance or capital position will be adversely affected Risk management practices are strong for the size, sophistication and market risk accepted by the institution Level of earnings and capital provide substantial support for the amount of market risk taken by the institution 1

31 CAMELS Sensitivity to Market Risk Rating Market risk sensitivity is adequately controlled Moderate potential that earnings performance or capital position will be adversely affected Risk management practices are satisfactory for the size, sophistication and market risk accepted by the institution Level of earnings and capital provide adequate support for the amount of market risk taken by the institution 2

32 CAMELS Sensitivity to Market Risk Rating Control of Market risk sensitivity needs improvement Significant potential that earnings performance or capital position will be adversely affected Risk management practices need to be improved based on the size, sophistication and market risk accepted by the institution Level of earnings and capital may not adequately provide support for the amount of market risk taken by the institution 3

33 CAMELS Sensitivity to Market Risk Rating Control of market risk sensitivity is unacceptable Significant potential that earnings performance or capital position will be adversely affected Risk management practices are deficient for the size, sophistication and market risk accepted by the institution Level of earnings and capital provide inadequate support for the amount of market risk taken by the institution 4

34 CAMELS Sensitivity to Market Risk Rating Control of market risk sensitivity is wholly unacceptable Level of market risks assumed by institution is an imminent threat to its viability Risk management practices are wholly inadequate for the size, sophistication and market risk accepted by the institution 5

35 Reputational Risk Assessment Corporate Governance Management integrity Staff competence / support Corporate culture Risk management and control environment

36 Reputational Risk Assessment Financial Soundness / Business viability Business practices Customer satisfaction Legal / regulatory compliance Contagion risk / rumors Crisis management Disclosure and transparency

37 Reputational Risk Rating Strong reputational risk management in all respects Effective procedures to protect institution from potential threats to reputation and mitigate effects of reputation events No negative publicity regarding the institution’s business practices noted, franchise value only minimally exposed to reputational risk Fully effective internal controls and audit Management fosters sound corporate culture / embedded in the organization Management anticipates and responds well to changes of a market or regulatory nature Low losses from fiduciary activities Excellent track record on regulatory compliance / limited experience of litigation and customer complaints 1

38 Reputational Risk Rating Adequate reputational risk management in most cases Effective procedures to protect institution from potential threats to reputation and mitigate effects of reputation events No negative publicity regarding the institution’s business practices noted, franchise value only minimally exposed to reputational risk Fully effective internal controls and audit Management fosters sound corporate culture / embedded in the organization Management anticipates but may responds less frequently to changes of a market or regulatory nature May experience few losses from fiduciary activities Good track record on regulatory compliance / limited experience of litigation and customer complaints Safe and sound performance Financial condition of service provider is acceptable While internal control weaknesses may exist, there are no significant supervisory concerns. As a result, supervisory action is informal and limited. 2

39 Reputational Risk Rating Negative publicity regarding business practices is not serious Levels of litigation, losses and customer complaints are manageable and commensurate with volume of business No significant cases of regulatory non-compliance noted and exposure to reputation risk is not expected to increase in the foreseeable future Management adequately responds to changes in market, business and regulatory environment. Internal controls and audits are generally effective Self assessment practices are weak and are generally reactive to audit and regulatory exception. Repeat concerns / customer complaints may exist indicating that management may lack the ability or willingness to resolve concerns. Financial condition of service provider may be weak and/negative trends may be evident. While financial and operational failure is unlikely, increased supervision is necessary Formal or informal action may be necessary to secure correction action. 3

40 Reputational Risk Rating Negative publicity regarding business practices is increasing and franchise value is substantially exposed by reputation risk. Poor administration, conflicts of interest or other legal or control breaches may exist. Risk management processes inadequately identify and monitor risk and are not appropriate for the size, complexity and risk profile of the institution Unsatisfactory regulatory compliance, poor record of corrective action and potential exposure from reputation risk is increased by complex products and structures Significant weaknesses in management information Management does not perform self assessments and demonstrate an inability or unwillingness to correct audit and regulatory concerns. Financial condition of service provider is severely impaired and/or deteriorating. Failure of the financial institution or service provider may be likely unless reputation issues are remedied. Close supervisory attention is necessary and, in most cases, formal enforcement action is warranted. 4

41 Reputational Risk Rating Financial institutions and service providers operation / performance is critically deficient and in need of immediate remedial action. Negative publicity regarding business practices is increasing and franchise value is substantially exposed by reputation risk. Problems and serious weaknesses may exist in one or more of the critical operational, administrative, loans or investment activities Regulatory compliance is critically deficient, no significant improvement noted Risk management processes are severely deficient and provide management little or no perception of risk relative to the size, complexity and risk profile of the institution Management does not perform self assessments and demonstrate an inability or unwillingness to correct audit and regulatory concerns. Failure of the financial institution or service provider may be likely unless reputation issues are remedied. Close supervisory attention is necessary and, in most cases, formal enforcement action is warranted. Ongoing supervisory attention is necessary. 5

42 Concentration Risk Assessment Geographic concentration Single name Related party Balance sheet Business / Product line

43 Operational Risk Assessment Operational risk is "the risk of a change in value caused by the fact that actual losses, incurred for inadequate or failed internal processes, people and systems, or from external events (including legal risk), differ from the expected losses". Basel Definition

44 Operational Risk Assessment Internal Fraud - misappropriation of assets, tax evasion, intentional mismarking of positions, bribery External Fraud- theft of information, hacking damage, third-party theft and forgery Employment Practices and Workplace Safety - discrimination, workers compensation, employee health and safety Clients, Products, & Business Practice- market manipulation, antitrust, improper trade, product defects, fiduciary breaches, account churning Damage to Physical Assets - natural disasters, terrorism, vandalism Business Disruption & Systems Failures - utility disruptions, software failures, hardware failures Execution, Delivery, & Process Management - data entry errors, accounting errors, failed mandatory reporting, negligent loss of client assets

45 Strategic Risk Assessment Strategic Risk is the risk of current or prospective impact on the financial institution’s earnings, capital, reputation or standing arising from change in the environment and from adverse strategic decisions, improper implementation of decisions or lack of responsiveness to industry, economic or technological changes.

46 Strategic Risk Assessment Four Key Elements:  Strategic Planning  Alignment and change management  Implementation and monitoring  Performance evaluation and feedback

47 Strategic Risk Assessment Compatibility or suitability of the institution’s goals and objectives (consistent with - corporate vision, values, culture, business direction, risk tolerance) Financial objectives consistent with strategic goals Strategic decisions are prudent relative to size and complexity

48 Strategic Risk Assessment Responsiveness to changes in environment Adequacy of resources in carrying out strategic decisions Implementation of strategic decisions Impact of strategic decisions

49 CORBASCEL Proposed Risk Assessment System – Inherent Risks Concentration Risk Business Strategy Risk Capital Operational Risk Asset Quality Earnings Reputational Risk Sensitivity to Market Risk Liquidity

50 Group Exercise # 2 1. Using a scale of 1 – 5 (1 = Strong and 5 = Critically Deficient), develop a risk scoring (definition) matrix for the following inherent risks:  Strategic Risk  Operational Risk  Concentration Risk 2. Identify the inherent risks in each of the significant activities and score on the scale of 1 – 5 for each of the five credit unions provided for the case studies.

51 Quality of Risk Management and Oversight Operational Management Compliance Function Internal Audit / Supervisory Committee Function External Audit Function Risk Management Function Senior Management Board Oversight

52 Quality of Risk Management Assessment Operational management  Day to day management of significant activities  Adequate and appropriate for nature, size and complexity of the financial institution  Sufficient and effective in managing and mitigating key risks  Policies  processes  Control systems  Staff levels and experience

53 Quality of Risk Management Assessment Board Oversight  Vary based on size, structure and complexity of institutions  Institutions required to have in place an effective board of directors and senior management  Board agree risk appetite e.g. aggressive or conservative  Board of directors ultimately accountable for management and oversight of the institution  Depending on size, board may delegate some oversight responsibilities to board sub-committees e.g.. audit, risk management and human resource

54 Quality of Risk Management Assessment Senior Management Oversight  Depending on size, senior management may delegate some oversight responsibilities to other oversight functions:  Risk management  Supervisory Committee/Internal Audit  Compliance

55 Quality of Risk Management Assessment Level and quality of oversight and support of all institution activities by the board of directors and management The ability of the board of directors and management, in their respective roles to plan for, and respond to risks that may arise from changing business conditions or the initiation of new activities or products

56 Quality of Risk Management Assessment Adequacy of, and compliance with appropriate internal policies and controls addressing operations and risks of significant activities Accuracy, timeliness and effectiveness of management information and risk monitoring systems appropriate for the FI’s size, complexity and risk profile.

57 Quality of Risk Management Assessment (Audit and Internal Controls) Compliance with laws and regulations Responsiveness to recommendations from auditors and supervisory authorities Management depth and succession Extent that board of directors or management is affected by, or susceptible to, dominant influence or concentration of authority.

58 Quality of Risk Management Assessment (Audit and Internal Controls) Reasonableness of compensation policies and avoidance of self dealing Demonstrated willingness to serve the legitimate FI needs of the community The overall performance of the institution and its risk profile

59 Quality of Risk Management Rating Strong performance by management and the board of directors Strong risk management practices relative to the institution's size, complexity and risk profile. All significant risks are consistently and effectively indentified, measured, monitored and controlled. Management and the board have demonstrated the ability to promptly and successfully address existing and potential problems and risks. 1 Satisfactory management and board performance and risk management practices relative t of he institution's size, complexity, and risk profile Minor weaknesses may exist, but not material to the safety and soundness of the institution and are being addressed. Significant risks and problems are effectively identified, measured, monitored and control. 2 Management and board performance needs improvement or risk management practices less than satisfactory given the nature of the institution’s activities. Capabilities of management or the board of directors may not be sufficient for the type, size, or condition of the institution. Problems and significant risks may be inadequately indentified, measured, monitored or controlled. 3

60 Quality of Risk Management Rating Weak performance by management and the board of directors Weak risk management practices relative to the institution's size, complexity and risk profile. All significant risks are not consistently and effectively indentified, measured, monitored and controlled. Management and the board have not demonstrated the ability to promptly and successfully address existing and potential problems and risks. 4 Very weak management and board performance and risk management practices relative t of he institution's size, complexity, and risk profile Major weaknesses exist, that are material to the safety and soundness of the institution and are not being addressed. Significant risks and problems are not effectively identified, measured, monitored and control. 5

61 Quality of Risk Management Assessment Strong Function consistently demonstrates highly effective performance in the context of the key risks inherent in the significant Activity. Satisfactory Function demonstrates effective performance in the context of the key risks inherent in the Significant Activity.

62 Quality of Risk Management Assessment Needs Improvement Risk management function may generally demonstrate effective performance, but there are some areas where effectiveness needs to be improved in the context of the key risks inherent in the significant Activity. Deficient Risk Management function demonstrates serious weaknesses in effectiveness in the context of the key risks inherent in the Significant Activity. Critically Deficient Risk Management function demonstrates severe weaknesses in effectiveness in the context of the key risks inherent in the Significant Activity.

63 Residual Risk Assessment How key risks are managed in each significant activity – operational management Effectiveness of oversight functions  Governance / Board  Internal audit / Internal controls  Compliance Each key inherent risk is considered separately for each significant activity Determine aggregate residual risk

64 Residual Risk Rating Low Low probability of a material adverse impact on an institution’s capital or earnings due to exposure and uncertainty from potential future events. Medium Low Lower than average probability of a material adverse impact on an institution’s capital or earnings due to exposure and uncertainty from potential future events. Moderate Average probability of a material adverse impact on an institution’s capital or earnings due to exposure and uncertainty from potential future events.

65 Residual Risk Rating Medium High Higher than average probability of a material adverse impact on an institution’s capital or earnings due to exposure and uncertainty from potential events. High Higher than above average probability of a material adverse impact on an institution’s capital or earnings due to exposure and uncertainty from potential futur4e events.

66 Residual Risk Assessment

67 Direction of Risk Decreasing Increasing Stable

68 Risk Impact Capital Adequacy Assessment Level and quality of capital Overall financial condition Management’s ability to address emerging capital needs Nature, trend and volume of problem assets and adequacy of provision for loans and investment losses and adequacy of other reserves

69 Risk Impact Capital Adequacy Assessment Off balance risk exposures Growth prospects and past experiences in managing growth Balance sheet composition, nature amount of intangible assets, concentration risks, market risks, risks in non traditional activities Access to capital

70 Capital Adequacy Rating Strong capital level relative to the institution’s risk profile 1 Satisfactory capital level relative to the institution’s risk profile 2 Less than satisfactory level of capital that does not fully support the institution’s risk profile. Need for improvement even if the institution’s capital level exceeds minimum regulatory and statutory requirements 3

71 Capital Adequacy Rating Capital level is deficient based on risk profile Viability of FI may be threatened Assistance from shareholders and other external sources of financial support may be required. 4 Critical deficient level of capital such that institution’s viability is threatened Immediate assistance from shareholders or other external sources of financial support is required. 5

72 Risk Impact Earnings Risk Assessment Levels of earnings including trends and stability Ability to provide for adequate capital through retained earnings Quality and sources of earnings Level of expenses in relation to operations

73 Risk Impact Earnings Risk Assessment Adequacy of the budgeting systems, forecasting processes, management information systems Adequacy of provisions to maintain the allowance for loan and lease losses and other valuation allowance The earnings exposure to market risk, such as interest rate, foreign exchange and price risks

74 Earnings Risk Rating Strong earnings / more than sufficient to support operations and maintain adequate capital and allowance levels after considering asset quality growth, and other factors 1 Satisfactory earnings. Sufficient to support operations and maintain adequate capital and allowance levels after consideration is given to asset quality growth and other factors affecting the quality, quantity and trend of earnings Earnings that are relatively static, or evening declining could be given a “2” rating provided the FI level of earnings is adequate. 2

75 Earnings Risk Rating Earnings need improvement. Earnings may not fully support operations and provide for the accretion of capital and allowance levels relative to the institutions overall condition, growth and other factors. 3 Earnings are deficient. Insufficient earnings to support operations and maintain appropriate capital and allowance levels. Erratic fluctuations in net income or net interest margin, significant negative trends, nominal or unsustainable earnings, intermittent losses, or substantive drop in earnings from pervious years. 4 Earnings critically deficient, institution experiencing losses that represents a distinct threat to its viability through the erosion of capital. 5

76 Risk Impact Liquidity Risk Assessment Availability of assets readily convertible to cash without undue loss Access to money markets and other sources of funding Level of diversification of funding sources, both on and off-balance sheet The degree of reliance on short-term, volatile sources of funds, including borrowings and brokered deposits, to fund longer term assets

77 Risk Impact Liquidity Risk Assessment The trend and stability of deposits The ability to securitize and sell certain pools of assets The capability of management to properly identify, measure, monitor and control institution’s liquidity position, including the effectiveness of funds management strategies, liquidity policies, management information systems, and contingency funding plans

78 Liquidity Risk Rating Strong liquidity levels and well developed fund management practices Reliable access to sufficient resources of funds on favorable terms to meet present and anticipated needs. 1 Satisfactory liquidity levels and fund management practices Access to sufficient sources of funds on acceptable terms to meet present and anticipated liquidity needs. Modest weaknesses may be evident in funds management practices 2 Liquidity levels and funds management practices in need of improvement. Institution may lack ready access to funds or reasonable terms or may evidence significant weaknesses in funds management practices. 3

79 Liquidity Risk Rating Deficient liquidity levels or inadequate funds management practices Institutions may not have or not able to obtain a sufficient volume of funds on reasonable terms to meet liquidity needs. 4 Liquidity levels or funds management practices so critically deficient that the continued viability of the institution is threatened. Institutions require immediate external financial assistance to meet maturing obligations or other liquidity needs. 5

80 Composite Risk Assessment Composite ratings based on careful evaluation of managerial, operational, financial and compliance performance. Six key components used to assess institution’s financial condition and operations are capital adequacy asset quality, management capability, earnings quantity and quality, the adequacy of liquidity and sensitivity to market risk Rating scale ranges from 1 – 5, with a rating of 1 indicating the strongest performance and risk management practices relative to the institution’s size, complexity and risk profile Ratings of 5 indicated the most critically deficient level of performance, inadequate risk management practices relative to size, complexity and risk profile the greatest supervisory concerns.

81 Framework for Risk-based Supervision CORBACELS INHERENT RISKS Concentration Operational Reputation Business strategy Asset quality (credit) Sensitivity to Market QUALITY OF RISK MANAGEMENT / OVERISGHT Operational Management Compliance Risk Management Internal Audit External Audit Senior Management Board Oversight IMPACT ASSESSMENT Capital Earnings and profitability Liquidity CORBASCELSCAMELS

82 Framework for Risk-based Supervision CORBASCEL Step IV Assess Risk Mgn. Quality Operational Mgn. Oversight Step III Assess Inherent Risks and impact on capital, liquidity and earnings Step II Determination of Materiality Step I Identification of Significant Activities Step V Residual Risk Step VI Direction of Risk Step VIII Overall Rating Step VII Overall Assessment

83 Thank you! Any questions?


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