CREDIT RISK MANAGEMENT POLICIES AND PROCEDURES
CREDIT RISK MANAGEMENT STRATEGY
OBL should determine the level of credit risk that it can bear. It should develop a risk management strategy that is consistent with its credit risk tolerance and business goals. In formulating this strategy, the OBL should consider the following:
• The business cycle stage it is operating in;
• The nature of its business franchise and its relevant credit market segments;
• The portfolio mix that balances its willingness to bear concentration risk with sufficient diversification; and
• The business targets it has set for particular lending segments.
The Board of Directors (Board) of OBL should periodically review the credit risk strategy and any changes and concerns should be effectively communicated to all relevant staff. Shifts from the approved credit risk strategy should be subjected to appropriate review and endorsement.
CREDIT RISK MANAGEMENT STRUCTURE
OBL should adopt a risk management structure that is commensurate with its size and the nature of its activities. The organisational structure should facilitate effective management oversight and execution of credit risk management and control processes.
A senior management committee should be formed to establish and oversee the credit risk management framework. The framework should cover areas such as approval of business and credit risk strategy, review of the credit portfolio and profile, approval of credit policy, delegation of credit
approving authority and evaluation of the credit processes.
GUIDELINES ON CREDIT RISK MANAGEMENT
The Board of OBL should approve credit policies, including concentration limits and lending to related parties. It should also be the approving authority for changes and exceptions to such policies. Senior management of OBL should operationalise the credit policies approved by the Board by setting out...