Aggravating geopolitical risks and crisis trends in the Russian economy in conjunction with the constantly growing size of Vnesheconombank’s loan portfolio materially increased the importance of risk management for maintaining the Group’s financial stability. Vnesheconombank Group’s risk management system is driven by consistent and continuous processes that involve all entities of the Group, including making strategic and day-to-day management decisions.
The risk management system operating in Vnesheconombank Group is a continuous framework of practices, organisational measures and IT efforts that seek to identify, assess and control risks and timely take measures to prevent and minimise risks and maximise performance within the existing risk appetite limits. The system is deeply integrated into Vnesheconombank Group’s operations and operates at all its levels from the Bank’s supreme governance body, the Supervisory Board, to the Bank’s specialised units and entities responsible for risk control and management.
We are improving our risk management system by building uniform standards and approaches to risk management applicable to those subsidiaries of the Group whose operations are associated with high risks. To this end, in 2013 Vnesheconombank Group developed and approved its Risk Management Policy and a roadmap to implement the policy. The roadmap provides for building an organisational and regulatory and methodological framework to ensure consistency and continuity of risk management approaches used in the Group.
Important milestones in this path included the creation of Vnesheconombank’s Risk Management Committee and appointment of Vnesheconombank Group’s Risk Director in 2014. At the same time, the Group’s subsidiaries continued their efforts on refining corporate regulatory documents that govern the risk management procedure and bringing them in compliance with the Risk Management Policy of Vnesheconombank Group.
In 2014, the Russian economy was hit by plummeting oil prices, a highly volatile Russian rouble, capital outflow, rising interest rates in the financial market and sectoral sanctions imposed by some countries on the Russian Federation. In the second half of 2014, these sanctions also affected Vnesheconombank and its subsidiaries. The sanctions mainly constrain Vnesheconombank Group’s access to equity and debt financing in the US, Canada and EU member states with above
Due to the sanctions and other adverse macroeconomic factors, Vnesheconombank Group put in place additional measures to improve its risk management system, including the ones to identify, assess, manage, monitor and control risks, and to prepare reports that would describe the impact by unfavourable external factors on the financial position and performance of the Group to be used by the Bank’s and its subsidiaries’ governing bodies in making their management decisions.
Vnesheconombank’s Development Strategy for
Priority initiatives that are planned to be implemented in 2015 include the development of unified risk management standards for Vnesheconombank Group and a group-wide system of key risk indicators, as well as implementation of procedures for their monitoring. An important task for the Bank will also consist in improving risk monitoring procedures and addressing distressed and overdue debt in a more efficient way. These steps will help to timely identify a decline in asset quality and an impact by negative factors on Vnesheconombank Group's portfolio so as to take timely preventive measures.