CIM FINANCE. INTEGRATED REPORT 2022 | 63 1.1. COMPONENTS OF CFSL’S INTEGRATED RISK MANAGEMENT FRAMEWORK STRATEGIC LAYER MANAGEMENT LAYER The Group’s risk management governance structure begins with oversight by the Board of Directors, either directly or through its committees, to ensure that decision-making is aligned with the Board’s approved risk appetite. The executivemanagement is responsible for translating the Board’s high-level guidance into operational realities, beforemonitoring and reporting themback periodically to the Board/Board Committees. L1 Board of Directors L2 L3 Board Committees The RiskManagement Teamand Compliance Teamare independent of the business units. TheRiskManagement Teamis responsible for identifying, measuring, monitoring and reporting significant risks across the organisation. The aggregate enterprise-wide risk profile and portfolio appetitearediscussedat the respective riskmanagement forums, and further reported to the Board’s Risk Management Committee on a quarterly basis. Management Forums Risk Management Team Compliance Team RISK GOVERNANCE AND REPORTING RISK APPETITE RISK POLICIES AND PROCEDURES RISK INFRASTRUCTURE RISK ACCOUNTABILITIES STRATEGIC RISK FINANCIAL RISKS NON-FINANCIAL RISKS Strategic Risk Credit Risk Market Risk Funding & Liquidity Risk Compliance Risk Operational Risk Value destruction or less than planned value creation due to changes in the external and internal operating environments Possibility of a loss resulting from a borrower’s failure to repay a loan or meet contractual obligations The risk of a loss resulting from unfavourable changes in market rates and prices. CFSL is exposed primarily to interest rate risk Inability to obtain funding and to meet financial obligations as they fall due Fines or sanctions from non-compliance to laws and regulations Losses from inadequate or failed internal processes, people or systems Macroeconomic Competition Technology Regulatory Customer expectations Climate and environmental Sub-risk types Sub-risk types • Reputational risk • Competitive risk • Capability and culture risk • Capital adequacy risk • Environmental and Social Risk • Investment risk • Cybersecurity risk • Technology risk • Data Management risk • Fraud risk • Model risk • Business disruption • People risk • Third party risk EMERGING RISKS
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