The Fund’s risk management system
Consistency and continuity of the Fund’s enterprise
includes processes and procedures to
risk management system (hereinafter, the ERMS) is
ensure that the Executive Body and the
shown in the diagram below.
THE COMPANY’S
Management Body of the Fund receive
ENTERPRISE RISK
timely information about risks and risk
mitigation measures.
MANAGEMENT
SYSTEM
The main element of the risk management
■ Organizational
process of the Fund is its alignment
structure
with the organizational specifics, main
■ Financing principles
principles and business processes, as
■ Risk owners
well as employee engagement in the risk
management process.
RISK
CREATING
RISK
IDENTIFICATION
atmosphere
MANAGEMENT
of “concern”
IS A
■ Finding
about risks -
CONTINUOUS
responsibility of
risks
the company’s
PROCESS
■ Classifying
management
risks
RISK
CONTINUOUS
RISK
ANALYSIS
MONITORING
AND ASSESSMENT
■ Risk monitoring
■ Damage
■ Reacting to risks
SHARING
from realized risks
■ Assessment of risk
management
information
■ Probability of risk
performance
about risks
realization
DEVELOPING
METHODS
RISK MANAGEMENT
OF RISK
MEASURES
MANAGEMENT
■ Planning risk
■ Minimization of risk
management measures
■ Acceptance of risk
■ Appointment
■ Transfer of risk
of risk
■ Rejection of risk
owners
ANNUAL REPORT 2018
Currently, the enterprise risk management
ducted by KPMG, and a corrective action
tional loans of STB, securities portfolio and
structure has four levels of risk manage-
plan was drawn up.
temporarily available funds in STB. To mini-
ment: Board of Directors, Executive Board,
mize these risks, the Fund limited active op-
Department of Risk Management, subdivi-
In 2018, the risk management system was
erations with banks and conducted remote
sions (risk owners).
aimed at implementing the principles of
analysis of credit risks faced by STB, LC and
credit risks comprehensive analysis within
corporate issuers.
Identification and assessment of risks are
the framework of 2020 BRM for guarantee-
aimed at providing a common vision of ex-
ing SME projects. Given the importance of
Limiting was possible due to the Depart-
isting risks and their scale through basic
program implementation, the Fund annual-
ment of Risk Management’s work to im-
ranking to determine the most serious vul-
ly improves the methodology for assessing
prove the methodological and technical
nerabilities. This process allows the evalua-
project risks, which allows minimizing cred-
side of financial risk management.
tion of methods and procedures of manag-
it risks at an early stage.
Since the introduction of the risk manage-
ing the major risks.
ment system, the Fund has done a lot to
When deciding whether to provide or deny
implement the basic methodological doc-
Risk management is the process of formu-
guarantees, the Fund relies on the results
umentation on risk management. In partic-
lation and implementation of measures to
of its own comprehensive methodology of
ular, Baiterek National Managing Holding
reduce the negative effects and probability
credit risk assessment. This methodology
JSC in cooperation with PWC, the external
of losses, or to get a financial compensation
is based on a comprehensive analysis of
auditor, implemented a risk management
upon the occurrence of losses associated
interrelated risk factors that may adverse-
system developed in accordance with the
with risks arising from the Fund’s work.
ly affect the financial performance of the
best international practice based on the
project and augment the Fund’s credit risk
requirements of the Basel Committee on
In 2018, the Fund approved a Report on as-
in its guarantee portfolio.
Banking Supervision. It includes manage-
sessing the effectiveness of enterprise risk
ment and evaluation of all types of risks
management system (including existing risk
In 2018, the financial risk management tradi-
separately (credit, market, operational, busi-
management methods and controls) con-
tionally focused on three risk areas: condi-
ness and real estate risks), determining the
aggregate risks, taking into account normal
and stress scenarios, sufficiency of equity
ASSESSMENT OF EFFICIENCY OF CRMS COMPONENTS
and risk appetite (in terms of equity ade-
quacy, profitability and liquidity).
Process
83%
In accordance with the Risk Management
organization
Policy, the Executive Board of the Fund
provides the Board of Directors with a con-
Risk
solidated quarterly Risk Report containing
76%
identification
TOTAL EFFICIENCY
an overview and analysis of the key risks,
SCORE
information on compliance with risk limits
Risk
and the current status of key risk minimiza-
66%
assessment
tion programs and plans.
Risk
In
2018, the Fund continued to manage
83%
78%
management
operational risks. Measures on automation
of risk database, risk register were carried
out. All of the Fund’s divisions participate
Monitoring
82%
in this work and related documentation has
0%
20%
40%
60%
80%
100%
been approved including the following: up-
ANNUAL REPORT 2018
dated risk register, risk map and risk man-
The Fund’s enterprise risk register and risk
For each risk there is an action plan / risk
agement plans.
map contain risks in the following groups:
mitigation procedures:
strategic, financial (credit, market, liquidi-
1) Key risk indicators (KRIs) approved;
All the identified and assessed risks are shown
ty), legal and operational risks. Risks in the
2) Continuous database of realized and po-
on the risk map. The risk map helps to assess
redzone show the Fund’s greatest exposure.
tential risks implemented;
the relative importance of each risk (compared
Risks in the yellow zone are acceptable
3) Disaster recovery and crisis management
with other risks), as well as to highlight critical
risks. Risks in the green zone signify the
plans developed as part of the Fund’s con-
risks which require risk management activities.
lowest level of exposure.
tinuity management system.
Almaty region, “Almaty Fan Plant” LLP. Project for the production of air conditioners, fans.
The сompany has received support under the “Damu Regions-3” Program,
as well as through the subsidy and guarantee instruments in the framework of the 2020 BRM
ANNUAL REPORT 2018
Akmola region, “Samhat’ Shoe Factory” LLP.
Shoe manufacturing Project.
The company has received support
through the subsidy and guarantee
instruments in the framework
of the 2020 BRM
Karaganda region, “Eurasia Building” LLP.
Project for the construction of multi-apartment
residential buildings. The company is funded
under the Program “Nurly Zher”
ANNUAL REPORT 2018
KEY RISKS
Key risks of the Fund fall into the following
b. Financial risk is the probability of losses
functioning of the system, as well as to loss-
categories:
due to currency fluctuations and nonbal-
es caused by external events, including legal
a. Credit risk of the Funds counterparties
anced structure of interest rates.
risks (except strategic and reputation risks).
means a risk of losing funds allocated in
c. Operational risk is the risk that leads to
d. Legal risk is the potential risk due to breach
STB, MC and LCs due to their failure to ful-
losses resulting from inadequate or incor-
or failure to comply with the legislation, reg-
fill their obligations to the Fund.
rect internal processes, employee actions,
ulations, agreements, accepted practices or
ethical standards.
INTERNAL CONTROLS
The system of internal control is an integral
measures are taken to rectify identified vio-
TOTAL
part of corporate governance ensuring the
lations/observations and to improve internal
SCORE
efficiency of business processes.
controls. On a regular basis the Department
of Risk Management does the following:
OF INDEPENDENT
The following measures are taken to im-
1) Monitoring the implementation of rec-
ASSESSMENT
prove the Fund’s internal controls system:
ommendations of the Office of Internal
OF THE INTERNAL
1. In accordance with the COSO model
CONTROLS
(Committee of Sponsoring Organizations
SYSTEMS 2018 WAS
of the Treadway Commission), the proce-
dures described in the Internal Controls
Policy (approved by the decision no. 73 of
the Fund’s Board of Directors dated Sep-
88%
tember 20, 2016) are being changed/
CONTROL
RISK
added to make the internal controls
ENVIRONMENT
ASSESSMENT
system more effective;
2. The concept of “internal control
system” is explained in greater de-
Audit (OIA) related to all of the
tail, describing the three lines of
Fund’s structural units;
defense in internal controls spec-
2) Monitoring the implemen-
ifying the actors of the internal
tation of recommendations of
controls system, their responsi-
the external auditor;
COSO
bilities and scope of authority;
3) Monitoring the implemen-
3. Five interrelated components
tation of recommendations
CONTROL
MONITORING
of the internal controls system
PROCEDURES
of Baiterek National Manag-
are described in detail (according
ing Holding (the Fund’s sole
to the COSO model), including:
shareholder) and the Fund’s in-
control environment; risk assess-
dependent directors.
ment; control procedures; informa-
tion support and information exchange;
INFORMATION
In 2018, an independent assessment
monitoring and effectiveness assessment
AND COMMUNICATION
of the Fund’s internal control system
of the internal control system.
was performed by DeloitteLLP. Total
In order to identify risks and deficiencies in
score of independent assessment of the in-
the internal controls system, comprehensive
ternal controls systems was 88%.
ANNUAL REPORT 2018