Risk Management (RM) goes hand-in-hand on co-equal footing with LANDBANK’s business strategy. It is an integrative component of good governance which the LANDBANK Board, Risk Oversight Committee (RISKCOM) and Senior Management oversee to ensure adequacy of framework, policies, internal controls, RM systems and procedures to manage risks.
The Bank’s core RM philosophy is to balance risk and reward by maximizing business opportunities, operating within the risk threshold and minimizing losses beyond its appetite. RM is also embedded in all the business processes of the Bank and it ascertains that risk-taking is commensurate with its risk appetite.
The Bank’s RM completes the triumvirate of audit and compliance functions which focus on the risk controls of the Bank. Together with internal audit and compliance, the synergy of the three functions provides credence to the role of the Bank’s corporate governance in implementing an effective RM framework.
LANDBANK’s RM approach is governed by the Board-approved Enterprise RM (ERM) anchored on its mission, vision and strategic objectives. The LANDBANK’s implementation of the ERM system with defined pro-active RM departs from silo approach. Thus, RM is implemented cross-functionally across the entire organization with active participation of the Board, Senior Management and all business units (BUs) of the Bank. ERM is implemented in three levels namely strategic, portfolio and transactional levels.
At the Strategic Level, the LANDBANK Board through the RiskCom and Senior Management, are actively involved in an enterprise-wide RM oversight which involves formulation and approval of RM framework, policies and strategies, internal controls, and RM system as well as the annual review thereof. The LANDBANK Board and Senior Management are also involved in an organizational-wide risk monitoring which is used as basis for decision-making and review of LANDBANK’s controls/mitigating measures (operational, financial and compliance control) and RM system.
At the Portfolio Level, the Groups and Departments oversee the implementation of policies and processes and monitor possible breaches. RM Group (RMG) recommends policies, processes and revisions based on risk reports submitted by the risk-taking BUs to address risk occurrences that cannot be solved at the level of the risk-taking BUs.
At the Transactional Level, the Authorized Risk Takers (ARTs) who act as the first line of defense are involved in the actual implementation of risk policies and procedures. The ARTs embrace the continuous management of risk events and immediately escalate policy breaches, procedural infractions and related risk occurrences that cannot be solved at their level to the Department or Group Heads.
Risk Governance Framework
RM involves the oversight function covering risk identification, assessment, measurement, control, monitoring and reporting of risks inherent in all activities of the Bank. The RMG, as an independent unit, performs the oversight function for all major risk areas (credit, market, operational, compliance, interest rate in the banking book, counterparty credit, liquidity, reputation, strategic, subsidiaries, trust operations, Information Technology [IT], related party transactions risk, among others) of the Bank. RMG reports functionally to the Risk Com and administratively to the President and Chief Executive Officer of LANDBANK.