Risk management is based on the following principles:

• using a flexible and an appropriate risk management system;
• using appropriate informational systems for measuring, monitoring and     reporting risk exposures;
• applying stress tests as a tool to complement other approaches to risk management and ensuring their integration for the planning of capital and liquidity;
• establishing limits for financial risks exposure, the most important group of banking risks: the only ones that can be generated, manipulated, amplified or diminished by the bank’s management;
• ensuring the optimal size and structure of the Bank’s capital, necessary for the efficient management and protection against risks;
• maintaining a sufficient liquidity level in order to compensate the expected and unexpected fluctuations in the balance sheet and the growing needs of the Bank.

The main objectives of risk management system are:

•    to identify, evaluate, monitor and control existing and potential sources of internal and external risks;
•    to establish clear responsibilities in risk management, segregation of duties and obligations, to ensure the implementation of organizational and administrative controls;
•    to develop a system that measures financial performance, taking into account expected and unexpected losses;
•    to define and implement the principles of risk diversification and portfolio management;
•    to identify the acceptable risk level and to establish exposure limits;
•    to insure against risks and/or to create reserves for different types of risk;
•   to ensure transparency and continuous communication between Bank’s subdivisions through a comprehensive monitoring and reporting system;
•    permanent analysis of achievements and failures of risk management system;
•   to provide professional and specialized knowledge in the process of identifying and monitoring different types of banking risks.