Citibank 2013 Annual Report Download - page 138

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COUNTRY AND CROSS-BORDER RISK
COUNTRY RISK
Overview
Country risk is the risk that an event in a country (precipitated by
developments internal or external to a country) could directly or indirectly
impair the value of Citi’s franchise or adversely affect the ability of obligors
within that country to honor their obligations to Citi, any of which could
negatively impact Citi’s results of operations or financial condition. Country
risk events could include sovereign volatility or defaults, banking failures
or defaults, redenomination events (which could be accompanied by a
revaluation (either devaluation or appreciation) of the affected currency),
currency crises, foreign exchange and/or capital controls and/or political
events and instability. Country risk events could result in mandatory loan
loss฀and฀other฀reserve฀requirements฀imposed฀by฀U.S.฀regulators฀due฀to฀a฀
particular฀country’s฀economic฀situation.฀See฀also฀“Risk฀Factors—Market฀and฀
Economic Risks” above.
Citi has instituted a risk management process to monitor, evaluate and
manage the principal risks it assumes in conducting its activities, including
risks associated with Citi’s country risk exposures. For additional information,
see “Managing Global Risk” above. As part of this risk management process,
Citi has a dedicated country risk unit that assesses and manages its country
risk exposures. Citi’s independent risk management, working with input from
the businesses and finance, provides periodic updates to senior management
on significant potential areas of concern across Citi that can arise from risk
concentrations, financial market participants and other systemic issues.
These areas of focus are intended to be forward-looking assessments of the
potential economic impacts to Citi that may arise from these exposures.
While Citi continues to work to mitigate its exposures to potential
country risk events, the impact of any such event is highly uncertain and
will ultimately be based on the specific facts and circumstances. As a result,
there can be no assurance that the various steps Citi has taken to protect
its businesses, results of operations and financial condition against these
events will be sufficient. In addition, there could be negative impacts to Citi’s
businesses, results of operations or financial condition that are currently
unknown to Citi and thus cannot be mitigated as part of its ongoing
contingency planning.