Risk Management

Operations Risk
Operations risk means the possibility of losses being incurred due to inappropriate or poorly timed transactions, errors stemming from improper processes, fraudulent actions, and other factors.
   To minimize such risk, the Bank is continually strengthening its administration and management systems by raising administrative standards, implementing measures to prevent clerical errors, and increasing the reliability and efficiency of business operations.
   Specific measures include establishment of regulations for handling each type of transaction and assuring that processes conform rigidly to such regulations. The Bank also provides training tailored to each operation area and rank, as well as on-the-job training, to raise the level of its administrative processes.
   Reflecting its assertive efforts to enhance the reliability and efficiency of its processes, the Bank has implemented business process reengineering (BPR) reforms. It also acquired ISO 9002 certification in December 2000 for its loan document storage and management system. In addition, the Bank is upgrading its office equipment and investing in systems to increase efficiency. These include reinforcing checking functions through the use of computers.

System Risk
System risk refers to the probability of suffering losses due to computer breakdown caused by natural disaster, malfunction, or operator error.
   Reflecting increasingly diverse, complex, and voluminous transactions, banks use computers to handle a full spectrum of processes. If a system breaks down, therefore, the potential negative impact on society and the economy is huge. For this reason, it is extremely important for banks to ensure the safe operation of their computer systems.
   The Bank maintains two computer centers. Both centers operate as one system, constantly backing each other up to ensure that data is preserved if one center is damaged. To further assure system safety, communications circuits have been duplicated and data files backed up with double or triple redundancy.
   The Bank has a Contingency Plan in place to prepare for natural disasters and other emergency situations. This system enables the Bank to respond to long-term disruptions of communications circuits or online systems.

Internal Auditing System
The Auditing Division serves to investigate and audit the Bank’s internal operations. Its role is to enhance the effectiveness of risk management, prevent unlawful actions and clerical errors, and maintain and improve the soundness of the Bank’s operations. The Division is also charged with undertaking meticulous audits and providing appropriate guidance as needed. Specific activities include annual spot checks of each branch, division, and affiliated company. It also conducts unscheduled full-day branch audits.
   The Bank’s auditing system is designed to cope with the increasing diversity and complexity of risk. As such, the market and systems-related sections of the Bank are each subject to quarterly audits to assure that their respective risk management systems are functioning properly.
   In addition, the branches and divisions conduct their own audits at least once a month to prevent mistakes and irregularities and raise the level of administrative management.

previous page