Corporate Risk Management
is an important management process which plays an important role in taking the organization to its objective among the changing globalization business environment and highly competitive situation nowadays. Effective risks management system reflects good business moral management and transparency, which are the fundamental for the bank to steadily grow and endure.
Krungthai Bank PCL,
Thailand’s leading financial institution, realizes the importance of overall Enterprise Risk Management: ERM. Beside the risk management of the Bank of Thailand’s regulations in 2008, we began to utilize Enterprise Risk Management Framework of Committee of Sponsoring Organizations of the Treadway Commission: COSO’s standard to execute and manage risks for all levels of personnel: the committee, senior executives and staffs who are responsible for managing or controlling risks to proper or acceptable level, and to achieve objectives, strategies, obligations and visions as we regulated for improving efficiency.
The Bank of Thailand emphasizes five key risk factors as follow:
1. Strategic Risk
defines as the risk occurring from the assigned strategic plan, operation plan and improper implementation or inharmonious of internal and external environmental factors affected income, monetary fund or the business operation.
2. Credit Risk
defines as the risk occurring from fluctuation of interest rates, foreign currencies exchange and price index of money market that negatively affected business profit and monetary fund.
3. Market Risk
defines as the risk arisen from debts and obligations because of lacking of cash in flow and circulated capital.
4. Liquidity Risk
defines as the risk arisen from probability of cannot perform the agreed provisions, including the chance that the parties’ credit risk is degraded. Consequently, it causes the organization unexpected expenses on possible non-performing debts, which decreases business profit and monetary fund.
5. Operational Risk
defines as the risk from operational lost possibly occurring from improper work process or lacking of business supervision, including the effects on business profits and the organizational monetary fund. This operation risk covers the legal compliance risk.