Sberbank Group’s integrated risk management system is based on the Policy approved by the Executive Board. The system incorporates a three-level process:
Management level 1 (Executive Board, Sberbank of Russia’s Risk Management Committee) refers to the management of the Group’s aggregate risks, including the development of requirements for individual risk group management, risk management by Group members, composition of collegiate bodies and divisions at Group members responsible for the management of target risk groups;
Management level 2 (Management Committees responsible for the management of individual risk groups) is responsible for the management of individual risk groups of the Group, in compliance with the requirements set forth by management level 1;
Management level 3 (collegiate bodies and divisions of Group members) includes the management of individual risk groups by Group members, in compliance with the requirements and restrictions set forth by levels 1 and 2.
Based on the risk identification and assessment completed in Q1 2013, we composed a list of material risks for the Group to set up the basis for the creation of target risk management systems. To comply with the principles of complete coverage and thorough awareness of every material risk, we think that we need the system of risk management which would comply with the bank’s Integrated Risk Management Policy, Bank of Russia’s requirements, and Basel II recommendations.
The bank’s achievements in the principal areas of risk management in 2013:
Based on the latest tools and technologies of credit risk management, the Group builds up common processes for retail lending which take account of client risk profile and use centralisation and automation to minimise the number of process participants. One of them is the Credit Factory technology used by the bank in retail lending: unsecured loans, mortgages, car loans, and credit cards. The technology is regularly improved. In particular, in 2013:
- An automated review of the real estate evaluation report was introduced;
- An automated passport reading to eliminate a manual check of the passport data entered to the system was implemented;
- An automated system was put into place designed to identify fake ID’s based on photographic material.
The Group launched a project aimed to automate the Credit Conveyor technology, with the ultimate goal to build up a transparent and manageable lending process for small businesses, reduce operating costs and credit process duration (including the handling of loan applications) decrease bank’s losses through a higher quality of loan application processing.
In 2013, we changed our approach to collecting outstanding indebtedness on retail loans. As opposed to previous years when Sberbank tended to use its own divisions to collect retail debts, last year we set up ActiveBusinessCollection LLC, a subsidiary responsible for collecting non-performing loans on an agency basis, that would compete with other debt collection agencies contracted by the bank. In 2013, we assigned RUB 5.8 bn of non-performing loans to our subsidiary.
In 2013, Sberbank was also active in the market of retail portfolio assignment. Total retail debts assigned in 2013 reached RUB 16.7 bn, which made it possible to fix potential losses from previous years and release the resources required to improve the collection of other outstanding retails debts.
Since May 2013, the automated operational risk management system has been introduced at all regional banks. The system incorporates a self-evaluation module for the bank’s divisions, and a module for monitoring key risk indicators. Employees of all functions are connected to the self-evaluation module. A stage-by-stage connection to the key risk indicator monitoring module is under way.
To improve the quality of operational risk management, all bank divisions and subsidiaries have appointed risk-coordinators who are regularly trained in the identification and management of operational risks.
More details of risk management are provided in the Financial Risk Management section of the Group’s IFRS financial statements.