DBS BANK CHINA LIMITED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2012 All amounts expressed in Rmb unless otherwise stated
[English translation for reference only]
45
48 FINANCIAL RISK MANAGEMENT
48.1 Risk governance
Under the Bank’s risk governance framework, the Board of Directors, through the Board Risk Management Committee ‘China BRMC’, oversees the establishment of robust
enterprise-wide risk management policies and processes, and sets risk limits to guide risk- taking within the Bank.
Management is accountable to the Board for ensuring the effectiveness of risk management and adherence to the risk appetite limits. To provide risk oversight, senior
management committees are mandated to focus on specific risk areas. These oversight committees are the
China Credit Risk Committee ‘CCRC’, the China Market Risk Committee ‘CMRC’, the China Operational Risk Committee ‘CORC’ and the China Asset
Liability Committee ‘ALCO’. On a day-to-day basis, business units have primary responsibility for risk management. In
partnership with the business units, independent control functions provide senior management with a timely assessment of key risk exposures and the associated
management responses. These units also recommend risk appetite and control limits for approval in line with the risk management framework, as well as supplemented policies and
procedures to identify, measure, analyse, and control risk of the bank.
48.2 Credit risk
The Bank takes on exposure to credit risk, which is the risk that counterparty may fail to discharge an obligation, resulting in financial losses to the Bank. Significant changes in the
economy, or in a particular industry segment that represents a concentration in the Bank’s
portfolio, could result in losses that are different from those provided for at the balance sheet date. Credit exposures arise principally in loans and advances, debt securities and
due from banks and other financial institutions. There is also credit risk in off-balance sheet financial arrangements such as loan commitments. The majority of the Bank
’s operation is located within the various major cities across China. However different areas in China have
their own unique characteristics in economic development, management therefore closely monitors its exposure to credit risk. China Credit department at Head Office centrally
coordinates the Bank’s credit risk management functions and reports to the Bank’s senior management via China Credit Risk Committee. The Bank structures the levels of credit risk
it undertakes by placing limits on the amount of risk accepted in relation to individual borrowers. Such risks are monitored on a regular basis and subject to an annual review.
DBS BANK CHINA LIMITED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2012 All amounts expressed in Rmb unless otherwise stated
[English translation for reference only]
46
48 FINANCIAL RISK MANAGEMENT continued
48.2 Credit risk continued A
