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A&T BANK 2014 FAALİYET RAPORU
ANNU L R PORT 2014
Risk Management Policies
Credit Risk
The Bank defines the credit risk as the possibility of loss that it
might be exposed to if its credit client breaches the terms of the
agreement signed and partially or entirely fails to fulfill his/her
liabilities punctually.
In addition to the standard risk inherent in credit generating
activities, risks relating to economic conditions are also
considered.
With regards to the portfolio, one of the key components of
credit risk management, the Bank sets in-bank risk limits
in order to manage its loan portfolio more effectively, and
has determined a maximum risk ceiling for both individual
and group customers, both for cash and non-cash loans.
Accordingly, when the volume of certain loans exceeds a set
level, Bank management is alerted, and takes the necessary
precautions to minimize risk.
The Bank also uses an internal rating system as one of its most
important tools for measuring the quality of the companies
in its loan portfolio. A well-structured internal risk rating
system is one of the best ways to rate different credit risks to
which the Bank may be exposed. This system enables a more
accurate determination of credit portfolio characteristics,
the concentration of credits, non-performing loans and the
adequacy of provisions.
As a natural outcome of discussions on the new Basel
Capital Accord, banks’ credit risk management has once
again come into focus. With the new accord in place,
methodology, measurement and portfolio management
attitudes have changed considerably, with the ratings of the
Bank’s counterparties having become increasingly important.
Consequently, the Bank’s 2014 studies on credit risk
management have mainly focused on working to develop and
improve the Bank’s infrastructure in compliance with the new
capital accord.
Operational Risk
The Bank defines the operational risk as the risk of loss arising
from the following issues;
• Faults and illegal practices that occur due to the insufficiency
of the internal audit/control systems,
• Inappropriate behaviors of the employees of the Bank staff
and management,
• Faults of the Bank management,
• Faults and failures in the information technology systems,
• Disasters like flood, fire and earthquakes,
• Terrorist attacks.
Clear strategies overseen by the Board of Directors and senior
management, a strong operational risk and internal control
culture (including, among others, clear lines of responsibility
and a definitive segregation of duties), and effective internal
reporting and contingency planning are all crucial elements of
an effective operational risk management framework for the
Bank. Contingent processing capabilities are also used as a
means of limiting the adverse effects of operational risk. In this
context, a comprehensive Business Continuity Management
Plan has been prepared.
Relations with the Bank’s Risk Group
All relevant transactions with entities in the Bank’s risk group
are conducted in accordance with Banking Law, and within
the framework of market conditions. Detailed explanations of
these transactions are included in Footnote VII in section five of
publicly announced unconsolidated financial statements and
independent auditor’s report at 31 December 2014.