1. Risk Management System of the Bank

The bank's risk management system aims to achieve the following main goal - ensuring financial reliability, stable, safe and liquid functioning of the bank in the process of achieving the general strategic goals of the bank.

The main goal of the bank's risk management system is achieved through ongoing work to address the following priority tasks:

• application of the bank's risk limiting system in accordance with the risk tolerance indicators determined by the Bank's Supervisory Board;
• formation of an optimal organizational structure for risk management;
• ensuring the exclusion of a conflict of interest and the conditions for its occurrence in the process of risk management;
• providing the risk management system with qualified specialists, the necessary information systems and software and hardware;
• identification of risks in all types of activities, products and operations of the bank, as well as in payment systems in order to ensure its efficient, reliable and safe functioning;
• ensuring the availability of a methodological base for each of the risks, its improvement taking into account the risk profile of the bank and its application in work;
• determination of the relationship between individual risks;
• creation of a risk tracking system at the stage of a negative trend on the basis of key risk indicators, as well as a system for a quick and adequate response aimed at preventing or reducing the possible negative impact of risks on the bank's performance;
• obtaining sufficient compensation for the risk taken;
• ensuring regular reporting about the risks of the bank at all levels of the organizational structure of the risk management system;
• ensuring control over the effectiveness of the bank's risk management system.

The Bank distinguishes the following risks inherent in its activities: liquidity risk, credit risk, strategic risk, interest rate risk of the banking portfolio, market risks (interest rate risk of the trading portfolio, currency risk, stock risk, commodity risk), operational risk, risk of loss of business reputation, country risk, concentration risk.

The Bank is constantly improving the risk management system, taking into account the periodic assessment of its effectiveness.

• The organizational structure of the bank's risk management system is formed on the principle of functioning of the bank's three lines of protection against risks and includes:
• Bank’s Supervisory Board;
• Audit Committee, Personnel Appointment and Remuneration Committee, Risk Committee and Strategy Committee under the Bank's Supervisory Board, headed by independent directors from the Bank's Supervisory Board;
• Bank’s Management Board;
• Financial committee, Asset and Liability management committee, Project and Process committee, Distressed debts committee, Credit committee, Credit committee of the Central Client Office, standing meetings, Regional directorates and Banking service centers’ credit committees, Underwriting Department;
• Internal Audit Department, Internal Control Department;
• The official responsible for risk management in the bank;
• The official responsible for internal control in the bank;
• Risk Center;
• Other structural units responsible for organizing risk management work;
• Structural divisions responsible for the risks generated in the course of their activities;
• Central Client Office, Banking Operations Support Center, Regional directorates responsible for the risks generated in the course of their activities.

The main tools for improving the bank's risk management system are:

• determination of tasks to improve the efficiency of the risk management system and their implementation within the framework of the Risk Management Strategy
• improvement of the organizational structure of the risk management system;
• development and updating of the methodological base on risk management issues;
• development of information technologies of the bank to ensure the risk management process;
• planning a set of measures aimed at developing the risk management system.

2. Risk Management of the Bank holding company.

Risk Management System of the Bank holding company includes:

• The Bank’s Risk Management;
• The Participants of the Bank holding company’s Risk Management;
• The Risk Management of the Bank holding company on the consolidated basis.

The internal control system of the Bank holding company’s risks is multilevel and allocated through all hierarchy of the Bank’s Risk Management organizational structure and Participants of the Bank holding company.

At the level of the Bank the Risk Management internal control system of the Bank holding company includes:

• the Bank’s governing boards (the General meeting of shareholders of the Bank, the Supervisory Board of the Bank, the Management Board of the Bank);
• the Risk Committee under the Supervisory Board of the Bank;
• the Financial Committee of the Bank, the Asset and Liability Committee of the Bank, the credit committees, ongoing meetings– within decision making related to banking transactions with the Bank’s clients, including the Participants of the Bank holding company;
• the Cirman and Deputy Chairmen of the Board of the Bank, the Executive Directors of the Bank, the Operational Directors of the Bank;
• the Representatives of the Bank in the Supervisory Boards of Participants of the Bank holding company - joint stock companies;
• the structural subdivisions of the Bank’s head office including the Risk Centre, the Centre of Investment Projects Implementation, Internal Audit Department, Financial Department, Department of Cybersecurity;
• Regional directorates providing banking services to the Participants of the Bank holding company.

At the level of the Participants of the Bank holding company, the Risk Management internal control system of the Bank holding company includes:

• the governing boards of joint-stock companies - the General meeting of shareholders of the Bank, the Supervisory Board of the Bank;
• committees of the Participant of a bank holding company, created, if necessary, in order to resolve certain risk management  issues;
• structural subdivision related to risk management designated in the organizational structure of the Participant of the bank holding company (if any)
• auditing committee of the Participants of the Bank holding company;
• top management  of the Participants of the Bank holding company.

The objectives of the Risk Management internal control system of the Bank holding company on the consolidated basis are:

• efficiency and productivity of financial and other economic activity of the Bank based on performance results of the Participants of the Bank holding company;
• efficiency of the Risk Management, assets and liabilities management;
• efficiency of transactions executed between the Participants of the Bank holding company;
• the prevention of the transactions aimed at distortion of the Bank’s performance indicators;
• reliability, completeness, objectivity and timeliness of drawing up and submission of information on the activity;
• compliance by the Organizations of the Bank holding company and their workers with requirements of the legislation of the Republic of Belarus and local regulatory legal acts;
• an exception of involvement of the Organizations of the Bank holding company in the financial operations of the illegal nature, including the prevention and suppression of the actions connected with money laundering, terrorist financing and financing of proliferation of weapons of mass destruction.

The Risk management of the Bank holding company is exercised by means of the solution of the following top-priority tasks:

• implementation of measures aimed at ensuring the understanding of the pursued risk management policy by each employee of the Organization of the Bank holding company;
• formation of the habits necessary for the performance by each employee of their risk management functions within the scope of their job responsibilities;
• improvement of the decision-making process and strategic planning by understanding of potential opportunities and threats in the course of the activity of the Organizations of the Bank holding company;
• creation of the risks tracking system at a stage of emergence of a negative tendency, for prevention of risk which consequences are critically significant for the Organizations of the Bank holding company;
• formation of the risk management internal control system corresponding to scope and the nature of activity of the Organizations of the Bank holding company.

The risks internal control system in the Bank holding company is organized on the consolidated basis to ensure the possibility of obtaining comparable information concerning the risks level of the Organizations of the Bank holding company, including the possibility of aggregate assessment of the risks level of the Bank holding company.

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Information on appointment of a risk management officer at JSC Belagroprombank

Risk management officer at JSC Belagroprombank: Pavel Vasileuski, First Deputy Chairman of the Management Board of JSC Belagroprombank (appointed a risk management officer from 29.07.2016 by the Bank’s Order with the consent of the Supervisory Board of the Bank).