Risk-taking is a core part of business, and risk management is therefore a core control function.
The principal risks facing our business are credit risk, liquidity risk, market risk and operational risk.
At Group level, risk management includes risk evaluation and monitoring, oversight of size and distribution of risks, and identification of efficient methods to optimise the risk-reward balance of our operations.
VTB’s risk management is based on the following principles:
- analysis and management of our financial risks on a consolidated basis, covering all of the Group’s Russian and international subsidiary banks and key financial and non-financial companies;
- delineation of Group members’ levels of competency, and clear allocation of decision-making responsibilities among collective bodies and individual officers and managers;
- independence of risk assessment and control functions from business and operational banking functions;
- application of state-of-the-art risk-assessment methods and models;
- a rigorous reporting system at each level of management.
VTB Bank and all of its subsidiary banks have a Chief Risk Officer and Risk Division responsible for risk management. Subsidiary financial companies engaged in activities that entail financial risks (such as OJSC VTB Leasing and VTB Factoring Ltd employ the same general risk management principles as VTB’s subsidiary banks. Risk-management policies and procedures may vary from company to company depending on the country of operation and applicable laws and regulations, the nature and scale of a company’s activity and its area of specialization, e.g., VTB24’s specialization in retail banking. In this context, the differentiation of some risk management elements is also accommodated in VTB Group’s business model, which divides essentially into two global business lines (Corporate & Investment Banking and Retail Banking) with specific risk issues for each.
As part of the process of integrating the Group’s management activities, VTB has adopted strategy statements for each area of risk management. To support and co-ordinate the process of unifying Group risk-management systems and facilitate the timely exchange and analysis of information, as well as to improve risk-management procedures and implement effective consolidated risk control methods, a number of collective bodies report to VTB Group’s Management Committee:
- Group Risk Committee and a Risk Implementation Sub-Committee;
- Group Credit Committee;
- Assets and Liabilities Management Sub-Committee.
VTB Bank also has a Consolidated Risk Analysis Division and a Risk Strategy and Methodology Division, which support the efficient functioning and development of consolidated risk analysis and management systems at Group level and develop the conceptual and methodological underpinnings of these systems. These two divisions report to VTB Group’s Global Chief Risk Officer.
VTB’s consolidated risk-management system also includes setting consolidated limits (for example, credit risk limits on common counterparties or groups of related counterparties, or for countries and industry sectors), assessment of economic capital (capital at risk, or CaR) and consolidated management reporting on the Group’s risks. Of particular importance are preparations of VTB Bank and the wider Group for the introduction of Basel II standards in Russia.
A detailed review of VTB Group’s risk-management systems and risk profile is included in the Group’s Annual Reports, which are available at the Investor Relations section of this website.