Risks related to banking operations have become increasingly diverse and complex as the financial market has become more open and foreign currency-denominated transactions have increased. As a consequence, risk management has become more important in recent years.

Fundamental Objectives of Risk Management
To maintain and enhance the soundness of its operations, the Bank places the highest priority on risk management and has taken steps to reinforce its risk management structure and capabilities. Various types of risk are managed in accordance with the Bank’s Comprehensive Risk Management Regulations and other guidelines. Based on its fundamental risk management policy, which is reviewed semiannually by the Board of Directors, the risk management structure is continuously strengthened, raising management quality and controlling risk within acceptable limits. Management aims to achieve a rational balance between the dual goals of maintaining sound operations and increasing earnings power.
    Accurate analysis and quantification must be carried out to obtain an accurate understanding of credit and market risk, and it is important to achieve the dual goals of ensuring stable earnings and controlling risk at a level that corresponds to the Bank’s operational strength. With operations risk and system risk it is necessary for the Bank to minimize risk, as far as possible, and improve the accuracy and reliability of its practices as well as the mutual checks and balances involved in its operations.

Types of Risk and the Risk Management System
The Bank established a Business Administrative Division to exercise broad control over risk, thereby strengthening the system for managing various types of risk, including credit risk, market risk (interest rate risk, price fluctuation risk, exchange risk) liquidity risk, operations risk, and system risk. In doing so, the Bank makes efforts to refer to its operational objectives and manage risk in a timely manner.

Next page