CBE Risk Management depends on key principles to achieve an appropriate balance between risk and return; namely:
- Good reputation and positive public image.
- Effective management and risk management control and mitigation.
- Financial strength by managing the CBE's overall risk, along with their mitigation and minimizing, in coordination with other CBE departments.
- CBE sectors/departments are accountable for all risks in their capacities; and they are responsible for mitigating these risks by applying appropriate procedures and risk controls.
- Independent Internal Audit function, which monitors the effectiveness of the CBE's various activities, and oversees the CBE's special-nature functions.
- Transparency and disclosure, through providing the CBE's senior management, BOD and Audit Committee with periodical risk reports of existing and potential risks along with recommendations of corrective actions.
These principles are implemented within a risk management framework that comprises both qualitative elements, such as policies and procedures, and quantitative elements, such as risk metrics and credit limits. This framework is flexible enough to cover the CBE's current activities and also what may evolve in the future. It includes clearly-defined processes to be followed when new activities evolve and in case of special-nature functions.
The CBE's senior management is responsible for setting the CBE's risk tolerance and appetite; along with their optimal allocation across all CBE's sectors. Risk Management Department is responsible for implementing all necessary procedures to mitigate credit, market, operational risks; in addition to business continuity unit, information security and project management unit.
Policies to effectively manage these risks have been set, to ensure prudence, compliance and sound management, along with continuous assessment and mitigation of these risks by the CBE management. These policies are periodically revised and updated to cope with both international and domestic developments; marking the Central Bank of Egypt as an example in effective risk management.
The CBE Risk Management Department was established in April 2010, comprising the following departments: