The risk map based on the updated risk identification procedure of 2016 is shown below.
The risk map based on the updated risk identification procedure of 2016 is shown below. The same type of risk may be represented by different events that vary in their potential impact and frequency of occurrence.
If events of the same risk type fall into different matrix sectors, the risk significance is categorised via a simple majority based on the sector colour:
- Red: the most significant risks – sectors VI, VII, VIII, IX;
- Black: risks of medium significance – sectors II, III, IV, V;
- Grey: the least significant risks – sector I.
|Credit risk (incl. CCP risk and concentration risk)||Group's assets are subject to credit risk which is defined as the risk of possible losses caused by failure of a Group’s counterparty to perform or properly perform its obligations to it.|| The Group controls the credit risk by employing the following procedures: |
|Market risk||The market risk may emerge from the defaulting clearing member’s need to close major positions / sell the collateral, which in case of a low market liquidity may adversely affect the price, at which such position can be closed / or the collateral can be sold.|| The primary objective in managing the market risk upon investing idle cash is to improve the risk/profitability correlation, and to minimise any losses should any adverse events occur. With this view the Group: |
|Liquidity risk||Risk of potential losses following an adverse change in the value of the instruments comprising the bank book, caused by changes in interest and/or yield rates.|| The liquidity management system includes the following elements: |
|Bank book interest risk||Risk of potential losses following an adverse change in the value of the instruments comprising the bank book, caused by changes in interest and/or yield rates.||In order to measure the impact of the interest risk over the fair value of financial instruments, the Group holds regular assessment of potential losses, which may be caused by negative change of the market terms. The risk management division regularly monitors the financials of the Group and its principal members, assesses the sensitivity of the market value of the investment portfolio and of the proceeds to the interest risk.|
|Operational risk||Risk of potential losses caused by inconsistency of internal operational procedures to the nature and scope of the business, and/or statutory requirements, their non-observance by employees, lack of functionality, inadequacy of information, technological and other systems and/or their failure, as well as by external events.|| The principal operational risk management (mitigation) methods include: |
|Continuity risk||Risk of discontinued critical services.|| With the view to ensuring normal operations in emergency situations: |
|Legal risk||Risk of losses caused by breach of contractual obligations, litigations, criminal and administrative liability of Group members and/or their governing bodies acting in their official capacity.|| Legal risk management procedures include: |
|Regulatory risk||Risk of losses caused by inconsistency of Group’s operations with the laws, its Charter, and internal regulations.|| The regulatory risk is managed by the Internal Control Function, which takes the following steps to prevent losses caused by realisation of the regulatory risk: |
|Reputational risk||Risk of losses caused by a negative public opinion of the Group’s operational (technical) stability, quality of its services and its activities in general.||In order to avoid losses associated with the realisation of the reputational risk, the Group continuously monitors media space for information about the Group and analyses its internal processes applying the impact assessment methodology to each identified event or factor. The primary source of the reputational risk is the realisation of the operational risk, especially when such information becomes public. Thus, all actions taken to prevent and to mitigate the operational risk work simultaneously towards the reduction of the reputational risk.|
|Strategic risk||Risk of expenses (losses) sustained by the market operator as a result of mistakes (defects) made in deciding on the operator’s business and development strategy.|| Principal methods of strategic risk management include: |