Risk governance is an important area of the corporate governance framework, and the SBI Shinsei Bank Group has positioned itself as a self-disciplined entity to control risk in a sustainable manner by properly defining and enforcing the supervision and execution functions of the Board of Directors and executives.
The SBI Shinsei Bank Group has formulated a Group Risk Governance Policy, which outlines the concept of governance based on a sound risk culture, business execution based on risk appetite and appropriate risk management. In order for financial institutions to secure stable profits and achieve sustainable growth,it is necessary to take on risks while clarifying their risk appetite, and to manage risks appropriately to support them. These are the aggregation of the judgments and actions of individual executives and employees and are strongly affected not only by rules and regulations, but also by the values and cultures of the organization. We believe that risk governance initiatives require a bird’seye view of all elements.
We have worked diligently to upgrade our risk management and continue to make ongoing efforts to develop a system commensurate with the risks we face. At the same time, we have focused on building
a system for appropriate business execution based on our risk appetite, and have developed an integrated management framework based on our risk appetite and consistency of financial plans. Furthermore, as a member of the SBI Group, we are continually working to foster a
sound risk culture based on our management philosophy.
We believe that risk governance is an important premise as appropriate risk-taking generates returns as expected and, in turn, aims to improve financial indicators under the sound risk culture.
Creating a sound risk culture is essential to establishing strong risk governance. The SBI Shinsei Bank Group has established the SBI Shinsei Bank Group Code of Conduct under the SBI Group’s common management philosophies and code of conduct. Based on this charter,
the SBI Shinsei Bank Group has established a risk culture based on a set of values that serve as behavioral principles for dealing with risk.
To improve corporate value, it is important not only to avoid risks, but also to take appropriate risk-taking measures. Accordingly, we have clarified the basic stance of the Board of Directors and the executives team and have implemented measures to foster a sound risk culture, including conduct of risk awareness surveys of employees.
The Risk Appetite Framework is a management framework of the company’s overall risk-taking policy,generally considered as the company’s “risk appetite.”
The SBI Shinsei Bank Group focuses on the consistency of risk appetite and financial planning as a key premise.By operating the existing functions related to both in an integrated manner, we have established a system that aligns the intentions of the Board of Directors with the
execution by the executives on risk appetite.
To ensure its risk management is more effective, the Bank has established various specific committees such as the ″Group Risk Policy Committee,″ ″Transaction Committee,″ ″Group Asset and Liability Management (ALM) Committee″ and ″Market Business Management Committee.″ All these committees are able to function effectively as bodies responsible for making important risk judgments by constantly improving their composition and functions in response to changes in the operating environment. The Group Risk Policy Committee, whose members include senior management such as the CEO, Chief Officer of the Group head of corporate planning and finance, and the Group head of risk management, performs the crucial role of setting and coordinating the appropriate and optimal level of risk taking by concurrently reviewing the Bank’s risk management policies and business strategy. SBI Shinsei Bank has established the ″Group Risk Management Policy″ as its fundamental policy on risk management and basic recognition of risk categories based upon its understanding of the totality of risks faced by the entire SBI Shinsei Bank Group and the need to actively manage them.
Financial institutions are exposed to various risks, including credit risk, market risk, interest rate risk, liquidity risk, and operational risk.
To maintain highly profitable and stable operations, a financial institution must make the control of these risks a management priority. For that purpose, the Bank must be able to ascertain that risks are taken in line with Bankwide policies as well as individual operational policies, remain within appropriate limits. To strengthen the required monitoring functions and further develop its risk management framework, the Bank established two risk management groups: 1) credit analysis divisions responsible for credit analysis, loan application approvals and monitoring and 2) divisions responsible for overall risk management, measuring and analyzing credit, market, and other risks, and integrating functions for examining and verifying fair value.
