| CIM FINANCE. INTEGRATED REPORT 2022 68 RISK MANAGEMENT REPORT 2.2.1. STRATEGIC RISK (continued) • We continue to track changes in the external environment and carry out market research to stay abreast of the latest developments whereby new strategies and products are developed accordingly. CFSLmitigates strategic risk through regular updates to the Board on industry developments, themacroeconomic environment and associated trends whichmay impact the Group’s activities, or require a reviewof the competitive environment and strategies. 3. CREDIT RISK 3.1. CREDIT RISK MANAGEMENT PRINCIPLES CREDIT RISK SUMMARY • CFSL’s overall credit book as of 30 September 2022 increased toMUR 17.4bn versusMUR 16.2bn as of 30 September 2021 with growth reflected primarily in the retail credit segment. • The retail credit segment, which accounts for 92% of the total credit book, is composed of 77% of consumer finance clients, 21% of credit card clients and 1% of leasing clients. • The non-individual segment accounts for 8% of the total credit book, primarily concentrated in the leasing business. This segment comprises small and medium enterprises, as well as large corporate clients operating in diverse industry sectors. • The portfolio concentration remains consistent with the Group’s risk appetite and risk/return expectations. • CFSL’s expected credit lossmodels were recalibrated in 2022 to consider past performance andmacroeconomic forward-looking variables. CFSL’s credit Risk Management framework incorporates governing principles that are defined in credit related policies and standards, which are further supported with more specific processes and operating procedures applying to each lending segment. CFSL’s credit policies and standards include prudential limits, which are set to achieve portfolio outcomes that are consistent with the Group’s risk appetite and risk/return expectations. Furthermore, the policies set the minimumcredit requirements in assessing the integrity and ability of borrowers tomeet their financial obligations and repayments. The RiskManagement function is responsible for the independent oversight of credit risk and for overall risk reporting to the Risk Management Committee of the Board and the Board on developments in credit risk and compliance with specific risk policies and limits. CREDIT APPROVAL PROCESS CFSL’s credit processes are designed with the aim of combining an appropriate level of authority in its credit approval processes with timely and responsible decision-making. Within the powers to act granted by the Board of Directors, credits are approved by decision-making authorities at different levels in the organisation, depending on the riskiness and the credit exposure of the customer.
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