Key Functional Structure Within Group Risk Management




The main function primarily involved in the management of risks in the Bank is Group Risk Management, which provides the main support to the Asset & Liability Committee (“ALCO”), Management Risk Committee (“MRC”), Board Risk Management Committee (“BRMC”) and other risk-related committees. Group Risk Management’s responsibility is to ensure the function is in line with Risk Governance & Corporate Governance for DFI issued by BNM and is responsible for the development and maintenance of sound risk management framework/policies/guidelines and procedures for the Bank and its main subsidiaries. In order to maintain its independence, Group Risk Management reports directly to the ALCO, MRC, BRMC and are made up of five (5) main functions as follows:-


Credit Risk


Credit Risk is primarily responsible to ensure all relevant areas of credit risk are identified, monitored, measured and reported within the Bank’s risk appetite, metrics and policies in order to enable the Bank to pursue its business plans sustainably. This encompasses the provision of independent credit risk appraisal at origination as well as during periodic credit reviews. Only viable financing/investment proposals with well-mitigated risks are considered for financing to minimise credit losses arising from financing/investment activities. Internal controls are established within the credit processes to minimize poor credit quality that could potentially impact the overall financial soundness of the Bank. Credit Risk also entails credit portfolio management involving constant review of sector performance, composition and quality of credit portfolio, concentration of credit risk and delinquency trends for accurate assessment of credit risk levels of the credit portfolio to achieve the desired risk appetite.


Operational Risk


The primary role is to assess, identify and manage the operational risk inherent in all material products, activities, processes and systems. The Function is to develop operational risk management strategies, policies and framework as well as to communicate and report the best practices in order to effectively manage the operational risks in the Bank. Included in the Operational Risk function is Business Continuity Management Coordination, whose main objective is to plan, coordinate, develop, implement and maintain the Business Continuity Plan (BCP) programme for the Bank. The Function is also responsible to manage shariah risk, outsourcing and IT risk matters.


Market Risk


The function is primarily responsible for implementing the risk control on market risk and liquidity risk. The function is responsible for the following:

  • Develop, implement and maintain a comprehensive framework, guidelines, procedure and limits related to market and liquidity risk comprising of both qualitative and quantitative methodologies/ tools to identify, measure, aggregate, manage, monitor, control and report;

  • Provide evaluation, analysis, information and recommendation on matters related to market risk to facilitate decision making;

  • Provide consultative/ advisory services to all relevant units within BPMB Group on matters pertaining to market and liquidity risk;

  • Perform Middle Office function by providing independent valuation, mark to market process on investment portfolio and daily independent oversight of the Group Treasury operations.


Credit Policy and Portfolio Management Risk


Portfolio Risk function manages risks which relates to the Bank’s credit portfolio, governance and reporting-wise.


Risk Strategy


Risk Strategy function primarily manage risks relating to risk-appetite, capital management (ICAAP and stress testing), climate risk and others which does not fall under the main risk categories of the Bank.


The major areas of risks to which the Bank is exposed to can be summarised as follows:-


Credit Risk


The potential loss of revenue and principal in the form of specific provision arising from the failure of a counterparties or the borrowers to honour debts or settlement through its lending.


Market Risk


Risk of losses in on and off balance sheet position arising from the movements in market price.


Liquidity Risk


The risk that the Bank will not be able to fund increase in assets and meet obligations as they come due without incurring unacceptable losses.


Operational Risk


The risk of losses resulting from inadequate or failed internal processes, people, systems or from external events. Such risks include IT risk, Human Resource risk, Business continuity/going concern risk, Legal risk, Process risk, Project risk, Outsourcing provider risk and reputational risk.


Interest Rate
Risk/ Profit Rate


Exposure of the Bank’s earning and financial condition to adverse movement in interest rate/profit rates.


Product Risk


Possibility of product incurring financial or opportunity loss attributed to poor reception by customer, competitiveness of products term and conditions, competencies of promoting and/or timing of entrance of the products.


Exchange Risk


Exposure of the Bank’s earnings and financial condition to fluctuations in the exchange rate.


Equity Price Risk

Exposure of Bank’s earnings and financial condition to adverse movements in equity indices and equity prices.


Commodity Price

Exposure of Bank’s earnings and financial condition to fluctuations in commodity prices.


Reputational Risk

The potential loss to financial capital, social capital and/or market share resulting from damages to the BPMB Group’s brand or reputation.