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Management report
rol AG gives great weight to factors such as issuance activity and
available refinanceable collateral. Moreover, additional steering in-
struments are continuously being developed in furtherance of pro-
active liquidity steering, something which will increase in impor-
tance with the implementation of Basel III.
Investment risk
Investment risk is steered by the management board, measured by
the risk management department and monitored by the finance de-
partment.
An expert approach ensures the appropriate assessment of poten-
tial risk.
Operational risk
The management of operational risk is the task of the Organisation
& IT department. All potential risks that can result from system or
process failures, mistakes by employees and external events are
analysed and evaluated with a view to devising suitable counter-
measures.
The resources needed to combat operational risk are determined
via a base indicator approach, and modern IT systems are used to
portray and manage risk. This process is backed up by regular in-
ternal audits and periodic reporting to ensure that operational risk
is tackled vigorously.
Risk-bearing capacity
In the process of steering overall risk, our capacity to cover risk is
tallied against all significant risks identified using modern methods
and systems suitable for this purpose.
The planned annual risk exposure represents the limitation of the
aggregated overall bank risk, taking into account not just the risks
actually identified and quantified but also other non-quantifiable
risks by putting in place a risk buffer. All risk-relevant information
is fed into monthly risk-bearing capacity reports, which are dis-
cussed in depth by the risk committee. Various different scenarios
are used to determine overall bank risk in order to ensure that suf-
ficient capital would be available to cope with a range of problem
situations.
At Raiffeisen-Landesbank Tirol AG, greater attention is given to the
credit, market and liquidity risk management processes due to the
fact that the focus of the bank’s activities is on private and com-
mercial customers and also treasury business. Credit risk is cal-
culated on the basis of default probabilities, and trading book and
banking book market risk and liquidity risk via key sensitivity fig-
ures. As well as the market-dependent risks, the overall bank-steer-
ing process also involves calculating investment risk and macro-
economic risk in order to represent all risks and take into account
the ever-growing supervisory requirements.
The risk capacity analysis thus forms the starting point for keep-
ing risky activities down to a reasonable level in order to ensure the
trouble-free continuing existence of Raiffeisen-Landesbank Tirol
AG while also fully exploiting its revenue potential.