Risk management continued The Internal Audit department’s scope of work is to • resources are acquired economically, used efficiently, determine whether the Bank’s overall risk management and protected adequately; framework, internal control and corporate governance • programmes, plans and objectives are achieved processes, as designed and represented by the in line with predetermined expectations; and Management Board, are adequate and functioning • significant legislative or regulatory issues impacting in a manner to ensure: the organisation are recognised and addressed in •material risks – including strategic, credit, compliance a timely and proper manner. market, liquidity, reputational and operational risks – are appropriately identified, measured, assessed and In order to fulfil its function, the Bank’s Internal Audit managed across the Bank, including its outsourced department has unrestricted access to all the Bank’s activities; records, property and personnel. •interaction between the various governance and risk management groups occurs efficiently and effectively; Treasury. Treasury is responsible for managing the •material financial, management and operational Bank’s assets and liabilities and its overall financial reporting is accurate, reliable and timely; structure and is also primarily responsible for managing •the Bank’s and its employees’ conduct is of high funding and liquidity risks of the Bank. integrity and their actions are in compliance with the Bank’s policies, standards, procedures, as well as applicable laws and regulations; Credit Committee tiers of subcommittees for Retail and Corporate Investment Banking loans Subcommittee Chair Approval limit for Corporate Banking loans (US$) Tier I Risk Manager of the relevant Less than US$ 2.0 million Credit Risk department Tier II Deputy CRO/Head of the Credit Between US$ 2.0 million and Risk department US$ 10.0 million Tier III CEO/CRO Greater than US$ 10.0 million Subcommittee Chair Approval limit for Retail Banking loans (US$) Tier I Risk Manager of the relevant Less than US$ 200,000 Credit Risk Management unit Tier II Head of the relevant Credit Risk Between US$ 200,000 and Management unit US$ 500,000 Tier III Deputy CRO Between US$ 500,000 and US$ 2.0 million Tier IV CEO/CRO Greater than US$ 2.0 million Credit Committee. The Bank has five credit committees Deputy CEO, Chief Financial Officer, Deputy CEO, (together, the “Credit Committees”), each responsible Corporate Investment Banking, Head of Quantitative Risk for supervising and managing the Bank’s credit risks in Management Department, Head of Treasury and Head of respect of loans for retail and wealth management clients, Trade Finance. A majority of votes is enough for approval. micro loans, SME loans, corporate loans and counterparty If the potential exposure exceeds US$ 10.0 million, then loans. These committees are: the Retail Banking Credit the decision is deferred to the ALCO. Committee, Micro loans Credit Committee, SME loans Credit Committee, the Corporate Banking Credit The Credit Committee for retail loans comprises four tiers Committee and the Financial and Governmental of subcommittees (for risk management purposes, loans Counterparty Risk Management Committee (FGCRMC). for wealth management clients are classified as retail FGCRMC manages, monitors and controls counterparty loans), for micro loans of one tier and for SME loans three risk in relation to financial and governmental tiers of subcommittees. Since 2017, micro loans and SME counterparties of the Bank. Each Credit Committee loan applications of less than US$ 1.0 million are approved approves individual loan transactions. by credit risk managers of the relevant Credit Risk department. The SME loans of more than US$ 1.0 million Each Credit Committee is comprised of tiers of are approved by the Head of SME Credit Risk Analysis subcommittees. The FGCRMC comprises two tiers unit. The Credit Committee for corporate loans comprises of subcommittees. The Committee consists of six three tiers of subcommittees. Participation by the Bank’s members – the Bank’s Deputy CEO, Chief Risk Officer, CEO is required for exposures exceeding US$ 10.0 million. 52 Annual Report 2018Bank of Georgia Group PLC