The State Bank of Pakistan (SBP) is exposed to a wide array of financial and non financial risks such as market, credit, liquidity, operational, strategic and reputational risks. These risks emanate exclusively from its statutory functions and its lead role in the development of national financial system. The SBP also functions within an environment characterised by continuous change and uncertainty. This requires constant monitoring and analysis of, and appropriate response to, potential and actual risks emanating from its statutory obligations, the evolving global financial and economic landscape. In order to effectively manage and to keep such risks within acceptable limits, the highest governance standards, both in terms of the reporting lines and organization, are key elements of the risk management function at SBP. For that purpose, a state-of-the-art comprehensive risk monitoring and reporting framework is required, that is capable of providing decision-making bodies with appropriate and timely risk management input.
In accordance with SBP Vision 2020, Risk Management Department (RMD) has been entrusted with implementing a comprehensive Enterprise Wide risk management framework to effectively deal with various types of risks in order to achieve organizational objectives. Led by Director, RMD is responsible for safeguarding SBP foreign exchange reserve management activities, implementing Enterprise Risk Management in the bank and performing organization wide IT security function.
RMD formulates and implements risk management policies and procedures for the assessment; quantification and monitoring of market, credit, operational, and others risks emanating from reserve management activities. It ensures relevance of existing policy and procedures with changing market dynamics. RMD performs ex-ante and ex-post risk attribution analysis and evaluates performance of reserve management activities as per approved benchmarks. RMD is also responsible for monitoring the compliance of tolerance limits defined in risk policies & procedures; and Investment Management Agreements (IMA) executed with external fund managers & the custodian.
The department is also serving as a secretariat to Management Committee on Enterprise Risk Management and is responsible for assisting Management and Board ERM Committees on designing and implementing an effective risk management function as per the best international practices. The department works for development and implementation of Enterprise Risk Management framework, encompassing the policies, procedures, tools and methodologies to establish a robust risk management function across the bank and its subsidiaries. The department aims to closely coordinate and provide required expertise to all other bank’s departments and clusters of the bank and its subsidiaries on risk related matters.
To ensure organization wide information security, its quality and consistency with strategic objectives, RMD is actively involved in the development of policies and controls measures to mitigate bank’s IT operational risks and provides cost-effective security services in support of bank’s IT systems and infrastructure. It also monitors and reports on risks associated with bank's IT operations.