Risk management: VTB Group risk management system

Identification of all material risk types, independent assessment and management of these risks, development of effective measures to maintain an optimal trade-off between risk and return of operations as part of a risk and capital management strategy are crucial for successful risk management.

VTB Group identifies the following most significant risks in its activities:

  • credit risk;
  • liquidity risk;
  • market risks;
  • operational risk;
  • concentration risk in terms of the following subspecies of this risk: credit concentration risk per borrower group; concentration risk of financial instruments.1

VTB Group risk management principles:

  • analysis and management of the Group’s financial risks on a consolidated basis, covering all Russian and foreign subsidiary banks as well as key financial companies of the Group;
  • differentiation of competence levels of the Group members, clear definition of the responsibilities of collegial bodies and officials in their decision-making process.
  • independence of risk assessment and control units from business units;
  • use of modern risk assessment methods and models with an acceptable level of model risk;
  • detailed reporting system at each level of risk management;
  • continuous improvement of the risk management system.

In order to ensure sustainable development on a continuous basis, including in stressful situations, VTB Group defines risk appetite. In order to concentrate the target risk profile and make decision in risk management on operational level, the risk appetite indicators of VTB Group are cascaded down to the operational level (by business lines, companies of VTB Group).

Organizational structure of risk management in VTB Groups includes:

  • coordinating collegial bodies of VTB Group;
  • collegial bodies of VTB Bank;
  • central office (Chief Risk Officer, responsible for integrated risk management of VTB Group, and risk function competence centers of VTB Group);
  • local management bodies, working collegial bodies (committees), structural units/ authorized officials of VTB Group members.

The risk management function at VTB Group level is centralized and carried out by VTB Bank, the Parent credit institution.

VTB Group identifies the implementation of the ESG Principles2 into the risk management system as one of the key strategic objectives of the development of the risk management system. VTB Group manages ESG risks by assessing the impact of ESG factors on the Group’s financial and non-financial risks.

VTB Group pays special attention to improving the risk culture and responsibility at various levels of management when making risk-related decisions. The risk culture is an integral part of the VTB Group’s risk management system and is actively developing within the framework of the operational risk management system.

A detailed description of VTB Group’s risk management system and information on the level and structure of risks accepted by VTB Group are contained in the published reports and materials, which can be found on the corresponding pages of the “Shareholders and Investors” section of the VTB Group website, including in the subsection “Disclosure of information for regulatory purposes”.

1 Management of these subspecies of concentration risk is carried out within the framework of management systems, respectively, credit risk and market risk.

2 Declaration “Transforming our world: The 2030 Agenda for Sustainable Development” adopted by the United Nations General Assembly on 25 September 2015.