Download Full Report
ptencn
Menu

How we operate

Integrated decision-making processes

Risk monitoring, assessment and control are part of Banco BOCOM BBM’s governance and decision-making processes in all areas. All our teams use risk models and parameters in such activities as calculations of economic capital, funding policy, origination, and credit portfolio management.


Our risk management guidelines, responsibilities and models are instated by the Board of Directors, which also approves the Risk Appetite Statement (RAS), the document that serves as a basis for our risk control policies and practices. This strategy enables us to manage our capital prudently and efficiently, in conformity with the institution’s risk appetite.

How we operate

Compliance

With the support and involvement of top management, our Compliance team works to ensure that the bank’s activities are conducted in accordance with the highest ethical and professional standards and in conformity with the applicable laws and regulations.

The compliance framework at Banco BOCOM BBM also includes the Compliance Committee, which reports to the Board of Directors via the Executive Committee. Our Code of Ethics and Conduct establishes the four principles that orient our activities: transparency, integrity, responsibility and excellence. Full adherence to this compliance culture is reinforced by regular training sessions for all members of staff, constant monitoring and the production of internal normative documents.

These include a set of policies and procedures that comply with the applicable regulations and implement industry best practices. Consistent and transparent rules and procedures establish how to prevent money laundering and terrorism financing, and how to combat corrupt practices.

How we operate

Credit risk Market risk
Liquidity risk Operational risk

Credit risk

Definition

Credit risk is the possibility of losses associated with failure by borrowers or counterparties to honor their financial commitments on time and in accordance with their contractual obligations.

Our actions

The Credit Committee, the Board of Directors and five other areas of the bank – Credit Risk, Credit Analysis, Legal, Contract Management and Internal Auditing – constitute our framework for managing credit risk, which functions as outlined below:

Credit Committee

Sets credit limits for business groups; tracks and assesses the portfolio and levels of concentration and risk; executes the bank’s credit policies; and establishes deadlines for solutions to issues relating to past-due loans or to deteriorating loan guarantees. If debt collection via the courts is necessary, for example, it decides when to file suit.

Board of Directors

Approves risk management policies and limits at least once a year.

Credit Risk

Responsible for monitoring, identifying, measuring, controlling and reporting credit risk, and assuring compliance with the limits set by the bank. Subordinated to the Chief Risk Officer, it centralizes and analyzes information relating to the management of individual risk per transaction and consolidated credit portfolio risk. It produces reports that are used by the Credit Committee as a basis for its decisions.

Credit Analysis

Analyzes the credit risk of business groups with which the bank has or plans to have credit relationships.

Legal

Draws up or analyzes all contracts signed by the bank with clients; organizes and coordinates action to collect debts and protect the bank’s rights.

Contract Management

Ensures that transactions comply with the terms and conditions stipulated in the Credit Limit Proposal (CLP), and that loan security is in order. Also responsible for issuing the contracts signed by the bank with clients.

Internal Auditing

Assesses and continuously monitors all business units and credit facility extension processes to ensure they are implemented in accordance with the bank’s governance and risk management policies.

How we operate

Credit risk Market risk
Liquidity risk Operational risk

Market risk

Definition

Market risk is the possibility of losses to the market value of portfolios, instruments or investments due to price, interest-rate or exchange-rate changes. Inflation and fluctuations in stock and commodity prices are some of the key market risk factors.

Our actions

In 1997, we created an advanced proprietary system that became an industry benchmark and has been continuously upgraded. Qualified tools and personnel identify, measure and monitor the bank’s exposure to market risk. Market Risk reports to the Chief Risk Officer (CRO) and shares its analyses with the Risk Committee and the Executive Committee. The unit comprises the following:

Risk Committee

Analyzes and reviews risk management policies at least once a year; sets operational limits for market risk and presents these to the Board of Directors for approval.

Market Risk

Assures correct monitoring and control of risk metrics.

Pricing

Responsible, among other things, for the pricing models and sources used to mark products to market. It does so independently of management areas.

Internal Auditing

Ensures that our market risk management policies are consistent and adequate to procedures.

O Value at Risk (VaR) é a ferramenta estatística usada no monitoramento do risco. Seu cálculo diário serve para medir a perda potencial da instituição ao longo de um determinado intervalo de tempo, sob condições normais de mercado e dentro de determinado nível de confiança. Submetemos o modelo de cálculo do Value at Risk a testes regulares de avaliação retroativa, chamados de backtesting.

O diretor de Tesouraria pode alocar o limite de VaR que estipulamos entre os inúmeros fatores de risco. A cada trimestre, o Comitê de Risco define, com autonomia em relação às áreas de gestão, os cenários de estresse, analisados diariamente pela nossa equipe.

How we operate

Credit risk Market risk
Liquidity risk Operational risk

Liquidity risk

Definition

Liquidity risk is the possibility of mismatched maturities, indexation mechanisms, currencies and/or values of possible payments and receivables. In practice, it is the risk that the institution is unable to honor its financial obligations, expected and unexpected, without affecting day-to-day operations and without incurring significant losses.

Our actions

In accordance with the guidelines pre-defined by the Risk Committee and approved by the Board of Directors, the liquidity risk management strategy is oriented by the bank’s liquidity goal, which is to guarantee sufficient funds to honor all liabilities and commitments at any time. The aim is to ensure that free cash flow will always be sufficient to support business continuity even in a situation of severe stress.

Our team analyzes the information needed for liquidity risk management and performs calculations considering a number of variables to analyze potential liquidity risks, such as projections for cash flow in expected scenarios and situations of financial stress, implicit risk for each client, additional funds required to settle debts, operating losses, marking to market of derivatives, and other obligations.

The main remit of Liquidity Risk, which reports to the Chief Risk Officer, is to assure compliance with operating limits and issue internal reports designed to contribute to decision making. As part of the process, Internal Auditing acts to guarantee the adequacy of procedures and consistency across policies and the actually implemented framework.

How we operate

Credit risk Market risk
Liquidity risk Operational risk

Operational risk

Definition

Operational risk is the possibility of losses resulting from failure, deficiency or inadequacy of internal processes, systems or people, as well as from fraud and external events. It includes legal risk, which is the possibility of problems relating to legislation or court orders that may hamper the bank’s business activities.

Our actions

Our Operational Risk Management Policy is a document made available throughout the bank to formalize the methodology, processes, roles and responsibilities in procedures for document registration and storage of the information used to manage operational risk. Segregated from Internal Auditing and reporting to the Chief Risk Officer, it is also responsible for publishing data to ensure that risk management activities are transparent. In accordance with this policy, all decision making follows best practices and complies with the applicable rules and regulations.

How we operate

  • How We Fund Our Activities
  • How We Control Risks
  • How We Decide
  • Our People

    • We prioritize transparency and security in our activities.

    Risk control is fundamental to our decision-making processes. For decades we have refined our proprietary models and applied risk management methodologies that are better suited to the business environment in Brazil, prioritizing transparency and security in our activities.

    Tools and guidelines integrated with our corporate governance structure, in conjunction with our long and qualified experience in capital protection and allocation, enable us to extend credit securely and achieve transparent and competent liquidity management.

    Our history is distinguished by continuous improvement, and we have always been at the cutting edge of the Brazilian financial service industry.

    Credit risk Market risk
    Liquidity risk Operational risk
    Compliance
    Integrated decision-making processes