Composition of the Board Integrated Risk Management Committee

The Board appointed Integrated Risk Management Committee (BIRMC) as at the end of the year comprised of the following members:

Mr. K.G.D.D. Dheerasinghe * - Chairman
(appointed w.e.f. December 30, 2011)

Prof. U.P. Liyanage -
(appointed w.e.f. April 01, 2011)

Mr. L. Hulugalle* -
(appointed w.e.f. April 01, 2011)

Mr. M.P. Jayawardena -
(appointed w.e.f. December 30, 2011)

Mr. A.L. Gooneratne - Managing Director/CEO

Mr. W.M.R.S. Dias - (Executive Director/Chief Operating Officer)

Mr. K.D.N. Buddhipala - (Chief Financial Officer & Secretary of the BIRMC)

Mr. S.C.U. Manatunga - (Chief Risk Officer)

*Independent Non-Executive Director

Mr. K.G.D.D. Dheerasinghe, the Deputy Chairman of the Bank, was appointed the Chairman of the Committee w.e.f. December 30, 2011, with the resignation of Mr. M.J.C. Amarasuriya, the former Chairman of Bank and the Committee. Mr. R.M.S. Fernando and Mr. B.R.L. Fernando who were members of the Committee ceased to be members upon relinquishing their services as Directors of the Bank, w.e.f. March 30, 2011 and December 31, 2011, respectively.

Refer Brief profiles of each Member.

Charter of the Board Integrated Risk Management Committee

The BIRMC was established by the Board of Directors, in compliance with the Section 3 (6) of the Direction No. 11 of 2007, on ‘Corporate Governance for Licensed Commercial Banks in Sri Lanka’, issued by the Monetary Board of the Central Bank of Sri Lanka under powers vested in the Monetary Board, in terms of the Banking Act No. 30 of 1988. The composition and the scope of work of the Committee is in conformity with the provisions of the Section 3 (6) (v) of the aforesaid Direction.

The Charter of the BIRMC was reviewed by the Board of Directors in June 2011. Functions of the BIRMC in the Bank’s overall Risk management framework have been discussed in detail under ‘Managing Risk at Commercial Bank’.

Board Integrated Risk Management Committee Meetings

The Committee held four Meetings on a quarterly basis, during the year under review. The attendance of Committee Members at Meetings is stated in the table. The BIRMC updates the Board on decisions made by the Committee in general and specifically of any risks which have or are likely to exceed prudential limits stipulated by the Board. The Committee submits a risk assessment report within a week of each meeting to the Board of Directors, seeking its views, concurrence and/or specific directions.

Methodology Adopted by the Board Integrated Risk Management Committee

The Committee continued to work very closely with the Key Management Personnel and the Board in fulfilling its statutory, fiduciary and regulatory responsibilities for Risk Management.

Duties and Responsibilities of the Committee

The primary responsibility of the Committee is to assist the Board of Directors in understanding and exercising regular oversight on risk management measures adopted by the Management in operating the Banking business. Duties of the BIRMC include determining the adequacy and effectiveness of such measures, and to ensure that the actual overall risk profile of the Bank conforms to the desirable risk profile of the Bank, as defined by the Board.

Activities of the Committee

In order to discharge the above duties and responsibilities, the Committee undertakes to carryout the following:

• Reviewing the terms of reference of all Management Committees dealing with specific risks or some aspect of risk, such as the Executive Integrated Risk Management Committee, The Executive Committee on Monitoring NPAs, The Credit Policy Committee and the Assets and Liabilities Committee.
• Monitoring the actions initiated by Senior Management to test the effectiveness of the measures taken by the respective Committees referred to above.
• Reviewing the annual work plan, related strategies, policies and framework of the above Committees, to ensure that the Committees have a good understanding of their mandate and adequate mechanism to identify, measure, avoid, mitigate, transfer or manage the risks within the qualitative and quantitative parameters set by the BIRMC.
• Maintaining a continuous dialogue with the Management Committees directly or indirectly dealing with specific risks, so that the BIRMC is immediately informed of any hindrance, obstacle, discouragement or constraint in the performance of their functions and/or the implementation of their decisions.
• Reviewing the risk indicators designed to monitor the level of specific risks at any given time, with a view of determining the adequacy of such indicators to serve the intended risk management objectives.
• Reviewing the actual results computed monthly against each risk indictor and take prompt corrective action/s to mitigate the effects of specific risks, in case such risks are exceeding the prudent thresholds defined by the Board.
• Reviewing and approving the parameters and limits set by the Management against various categories of risk and ascertain whether they are in accordance with the relevant laws and regulations as well as the desired policy levels stipulated by the Board.
• Taking appropriate actions against the failures of the officers responsible for risk management functionality to improve the overall effectiveness of risk management at the Bank.
• Monitoring the effectiveness and the independence of the risk management function within the Bank and ensure that adequate resources are deployed for this purpose.
• Reviewing the effectiveness of the Compliance function, to assess the Bank’s compliance with laws, regulations, regulatory guidelines, internal controls and approved policies in all areas of business operations.
• Reviewing the updated Business continuity and Disaster Recovery Plan annually.
  
  During the year 2011, the BIRMC supported execution of the overall business strategy within a set of prudent risk parameters that are reinforced by an effective risk management framework.

K.G.D.D. Dheerasinghe
Chairman - Board Integrated Risk Management Committee

Colombo
February 09, 2012