Risk Management and Control

Risk management policies, methodologies, procedures, and criteria.

Bank of Africa Europe aims to ensure the sound and objective management of its assets while achieving consistent and stable results over time and maintaining its financial and asset strength. To achieve this, the bank focuses on mobilising financial resources, managing liquidity, reviewing the credit portfolio, and providing trade finance to support international trade primarily between Europe, Africa, and the Middle East.

General principles governing risk management:

• Implement prudent strategies, policies, organisation, and management systems that are appropriate to the size, scope, and complexity of the bank's activities, grounded in quality banking practices.

• Ensure that the bank's actions comply with established regulatory requirements, limits, and restrictions, maintaining adequate compliance with current regulations at all times. Additionally, adopt principles that anticipate new regulatory developments to mitigate their potential impact.

• Safeguard results by controlling risk at the level of individual and business exposures, in line with the Bank's risk objectives.

• Commit to providing the necessary human resources, systems, and tools to maintain a risk profile that aligns with the established risk appetite.

• An independent risk management area (CRMO – Chief Risk Management Office) with active involvement from Senior Management, ensuring a robust risk culture aimed at protecting and securing an adequate return on capital.

• A risk control area (CRO – Chief Risk Officer) that forms part of the second line of defence and operates independently from business and risk management functions. It is responsible for comprehensive oversight of all risks, both financial and non-financial, ensuring they are managed according to the approved risk appetite and policies, and within defined limits. This function reports directly to the Board of Directors and supports the Joint Audit and Risk Committee on all risk-related matters. 

• Maintaining a low level of market risk (trading portfolio position) to ensure that, in stress scenarios, any losses have minimal impact on the bank's income statement.

• Promoting an institutional risk culture for effective implementation across the organisation.

Internal Risk Management and Control Policies and Procedures

Bank of Africa Europe has established effective policies and procedures for internal control and the management of risks arising from its activities.

Risk authorisation is conducted in line with the authority granted to various Credit Committees within the bank, based on the limits set by the bank's policies. The Monitoring Committee is responsible for overseeing the bank's customer portfolios and transactions, with the aim of early identification of exposures posing the greatest risk to the bank.

The Global Risk Control unit is tasked with analysing, monitoring, and reporting on risks, operating independently from the business units. It acts as the conduit for the Joint Audit and Risk Committee to ensure the effective implementation and oversight of risk appetite and risk culture within the organisation. Meanwhile, the Audit and Internal Control Departments perform necessary checks on the adequacy of operations and procedures, as well as control and monitor potential non-financial risks in our activities. This is supported by distinct bodies and mandatory committees established for this purpose.

Risk Appetite Framework

The Bank employs a proven risk management model that aligns with regulatory standards and international best practices, suitable for the scale and complexity of its activities.

The Board of Directors holds ultimate responsibility for risk management, annually approving the risk strategy and specifically defining the Risk Appetite Framework, which undergoes regular review.