ICICI Bank 2014 Annual Report Download - page 50

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Business Overview
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The Asset Liability Management Group continued to actively manage the Bank’s liquidity and the securities
portfolio held for compliance with statutory and regulatory requirements. This is done keeping in mind the
optimisation of the yield on the overall portfolio while maintaining an appropriate portfolio duration given
the volatile interest rate environment.
RISK MANAGEMENT
Risk is an integral part of the banking business and we aim at delivering superior shareholder value by
achieving an appropriate trade-off between risk and returns. Key risks include credit, market, liquidity,
operational, legal, compliance and reputation risks. We have an established risk governance framework
which ensures oversight and accountability, continuous monitoring of the environment and an integrated
evaluation for effective management of risk.
The Board of Directors has oversight on all the risks assumed by the Bank. The Board has established
Committees to facilitate focused oversight of various risks. These Committees have specific terms of
reference. Policies approved from time to time by the Board of Directors or Committees of the Board
constitute the governing framework for each type of risk. Business activities are undertaken within this
policy framework. Independent groups and sub-groups have been constituted across the Bank to facilitate
independent evaluation, monitoring and reporting of various risks. These groups function independently
of the business groups.
Every year, our Risk Committee approves a detailed calendar of reviews. The calendar of reviews include
reviews of risk management policies in relation to various risks, risk profile of the Bank, its overseas
banking subsidiaries and key non-banking subsidiaries, assessment of capital adequacy based on the risk
profile of the balance sheet, status with respect to implementation of advanced approaches under the
Basel framework and review of regulatory compliance issues. Our Credit Committee also approves every
year a detailed calendar of reviews covering the Bank’s exposure to various industries and outlook for
those industries, analysis of non-performing loans, overdues, incremental sanctions and specific review
of each portfolio. A summary of the reviews carried out by the Credit Committee and Risk Committee
is reported to the Board of Directors. Our Asset Liability Management Committee is responsible for
managing the balance sheet within the risk parameters laid down by the Board and Risk Committee and
reviewing our asset-liability position.
The Bank has dedicated groups, namely the Risk Management Group, Compliance Group, Corporate Legal
Group, Internal Audit Group and Financial Crime Prevention and Reputation Risk Management Group,
with a mandate to identify, assess and monitor the Bank’s principal risks in accordance with well-defined
policies and procedures. These groups are independent of all business operations and coordinate with
representatives of the business units to implement ICICI Bank’s risk management methodologies. The
Compliance Group is responsible to the Audit Committee of the Board.
Credit Risk: Credit risk is the risk that a borrower is unable to meet its financial obligations to the lender.
All credit risk related aspects are governed by a Credit and Recovery policy which is approved by our
Board of Directors. The Credit and Recovery policy outlines the type of products that can be offered,
customer categories, targeted customer profile and the credit approval process and limits.
In order to assess the credit risk associated with any corporate financing proposal, we assess a variety
of risks related to the borrower and the relevant industry. The Bank has a structured and standardised
credit approval process which includes a well established procedure of comprehensive credit appraisal
and credit rating. The Bank has developed internal credit rating methodologies for rating obligors. The