Risk management

The aim of risk management is to ensure that the capital base is adequate in relation to risk exposure, that fluctuations in financial results and market valuations are kept within fixed targets and limits and that risks are priced correctly so as to achieve profitability in the long term. All risk-taking is based on adequate know-how and relevant processes for managing and controlling risk, adequate capital allocation and pricing of the risk.

Executive management is responsible for organising and monitoring the risk management process. The executive management team has appointed a committee to manage, monitor and develop the risk management of credit and market risks. A committee has also been appointed to focus on matters concerning the Group’s capacity to bear risk and capital allocation. Within the limits set down, the role of the committees is to take risk management-related decisions, prepare matters to be decided upon by higher bodies and develop the risk management process overall. Committees are made up of Executive Committee members with line management responsibilities, Risk Control and other experts. Risk Control does not take part in decisions involving risk-taking.

The risk management process comprises risk control and risk management functions that are independent from one another. The remit of Risk Control includes drawing up principles, instructions and limits for risk taking, measuring and analysing risk exposures, assessing the need for economic capital, handling capital allocation and monitoring how risk management is carried out in the line organisation. The role of the line manager is to build up processes and know-how concerning risk management and internal control, to identify and analyse risks and take decisions, on a sound commercial basis, as to how the risks are to be managed through pricing, covenants, securities or other protective measures.

A unit operates within Group administration focusing on independent risk control, which reports directly to the Managing Director.

Aktia Group's Risk Management 2010