The Risk function at Future Bank was formally set up in September 2005. Within a short span little more than of four years the Bank managed to go into various areas of Risk Management. The overall Risk Management framework is enunciated through a Risk Charter which lays down the overall framework of strategies, infrastructure, policies and procedures. It also summarizes the committee structure adopted by the Bank for Management of Risk. The Risk Management Committee (RMC) set up with the representation of Senior Management, reports to the Board of Directors. The RMC is chaired by the CEO and is responsible for implementation, interpretation and follow up of the Risk Policies. The Terms of reference of the Committee broadly include the implementation of all policies relating to management Credit, Market and Operational Risk on an ongoing basis. There are two sub committees to specifically monitor Operational Risk and Credit Risk respectively. Both sub committees report to the main Risk committee. The Head of Risk reports to the CEO with a dotted line to the Board.

During 2009 additional staff was recruited in order to improve overall efficiency of RMD. In addition certain activities such as Credit Administration and SAM (recoveries) were segregated from Risk Management.. During 2009 based on CBB guidelines, a Risk profiling audit of Future Bank was conducted by an independent external auditor and report was sent to CBB. Based on the Gaps identified in the report the Bank submitted a time bound action plan to CBB. RMD follows up on this action plan and backlog if any is reported to the Basel Steering Committee, RMC and Board.

The Risk Management Department (RMD) is responsible for day to day management of Risk   which includes maintenance of various limits, monitoring of the limits, reporting all excesses and anomalies to RMC and follow up with respective front office representatives for regularization.

The entire initiative and road map of compliance with Basel II guidelines is being monitored by a Basel Steering Committee, chaired by CEO, oversees progress of various projects undertaken for the purpose.

The Retail Banking activities are being driven mainly to support deposit mobilization required for funding the assets.

This will be achieved through Branch expansion and product diversification. The products have been developed mainly to cater to the needs of the depositors as instruments of resource mobilization.

Credit Risk is being managed through standardization of each product, counterpart rating methodology and necessary organization and system support

Corporate Banking mainly caters to working capital medium and long term requirements of the commercial sector.

In addition the Bank also caters to credit requirements of non Bahraini MNC and Corporates having strong presence in the Middle East. The Credit and funding strategy defines the type of activities the Bank undertakes in order to achieve the broad goals defined under Business strategy.

The Treasury and Trade Finance is mainly responsible for the treasury function of the Bank and for developing good business relations with other Banks and FIs. In addition it caters to short term trade finance business mainly through forfeiting of Bills drawn under reputed Bank’s LCs.

The Risk Management framework is enunciated through the Risk Charter which lays down the structure of strategies, policies and procedures. It also summarizes the committee structure adopted by the Bank for Management of Risk. The Risk Management Department is responsible for day to day management of Risk.

The Risk Management Committee has been operational to oversee the implementation, interpretation and follow up of the Risk policy of the Bank as enunciated in the Risk Charter.

The Risk Management Committee is chaired by the CEO and reports to the Board. Its principal responsibilities are as follows:-

The risk appetite of the Bank is defined in the Risk Strategy document approved by the Board. Risk Strategy defines the risk categories to which bank is willing to expose and the levels up to which it is willing to expose ( limits ) while undertaking its business defined under overall business strategy and the Credit and funding strategy

The Credit Risk is managed through a set of Credit Risk Policy guidelines and the procedures as laid down in the Credit Risk Policy.

The Credit Risk policy is derived in accordance with the Risk strategy of the Bank which defines the Risk appetite of the Bank. The purpose of Credit Policy is to provide a framework to achieve the Strategic objectives set by the Board. It provides the guidelines for approving credit risk (limits) and, the prudential norms for managing concentration risk and the mechanism for monitoring and control as part of overall self regulation.
 

The Credit Risk policy document covers all credit activities undertaken by the business segments including non-strategic investments.

Operational risk (OR) is the risk of direct or indirect loss resulting from failed processes, technology, people or external events. It includes reputation risk. The Bank has put in place Standard Operating procedures which comply with the high standards of Internal Control. In the process, the activities have been segregated into back office and front office in accordance with international best practices.

The information  security policy is supported by  ISO 27001 standard. The MIS is being strengthened with particular focus on exception management. The Internal Audit Department is considered as the final layer of Internal Control and reports directly to the Board of Directors.

A Business Continuity plan is in place to ensure continuity of essential services to customers in case of occurrence of any calamity resulting in disruption  of normal business activity. Similarly, a disaster recovery plan is also in place. The Bank has set up disaster recovery site at one of its branches as a back up site in case of any disaster.

An Operational risk management policy and procedure framework has been adopted which defines key operational risk areas, key control standards and key risk indicators in line with the Basel II recommendations. The Bank currently follows the basic indicator approach for operational risk. The operational risk sub committee is in charge of implementation of the OR policy and reports to the RMC. The RMD implements OR procedures. A dedicated software is in place to monitor Operational Risk.