nterprise Governance

Enterprise governance constitutes the entire accountability framework of the organisation. It provides an integrated framework to help companies focus on both value-creating drivers that move the business forward and the need to ensure adequate control and oversight. There are two dimensions of enterprise governance conformance and performance that need to be in balance. It is important to achieve a balance between conformance and performance in order to have the best chance of business.

Enterprise Governance Framework

Conformance which is also known as ‘Corporate Governance’, covers issues such as board structures and roles and executive remuneration. The focal point of performance dimension is on strategy and value creation. It spotlights on helping the board to make strategic decisions, understand its appetite for risk and related key drivers of performance and identify its key points of decision-making.

CDB Approach

Enterprise governance framework is a holistic approach to Corporate Governance and Business Governance where CDB has identified the significance of it. In order to facilitate this, a specific structure has been formulated by key management personnel in order to proceed with the framework and remain committed to the highest standards of enterprise governance.

We have identified to be effective, the concern and tone for enterprise governance must begin from up on the line. While the responsibility of enterprise governance lies with the board of directors, the duty rests with the senior management to convert strategic direction set by the Board in the shape of policies and procedures and to establish an effective hierarchy to perform and implement those policies.

As indicated, headed by CEO, the Board will be responsible in deciding on the risk appetite and the corporate management will formulate the strategies. The formulated strategies will then pass to the Board where appraisal and challenges arise, based on evaluation and then approval is granted accordingly. The approved strategies will then be implemented and executed by senior management, which will then be communicated down the line and provide essential monitoring to consider the progress of strategies.

Board appointed committees will deal with conformance dimension, which includes Credit committee, Audit Committee, Integrated Risk Management Committee and Remuneration Committee. The committees are headed by independent and Non-Executive Directors, where accountability and assurance have been the key role. The performance dimension is centralised with the CEO, senior management and the CDB team, who would be responsible for strategy formulation, execution and evaluation. Internal Audit, Asset Liability Committee, Compliance Committee and Delegated Credit Committee will function in order to ensure effective resource utilisation and value creation.

Board Sub-Committees

Credit Committee

The credit committee which comprised of CEO and Non-Executive Directors is responsible for setting the strategic direction for credit management and ensures Board oversight on credit management. During the year the committee has evaluated market dimensions and taken essential decisions to appraise the credit policies.

Remuneration Committee

The Remuneration committee is headed by a Non-Executive Director. The committee set up to recommend the remuneration for Executive Director/CEO where the Board has the sole authority to take final determination of such recommendations.

Integrated Risk Management Committee

Integrated risk management committee is the heart of company’s risk management. The purpose of the integrated risk management committee is to standardise and smoothen the risk management process of the company. The Committee continuously assesses and monitors the effectiveness of the risk management framework and unveils strategies to mitigate the risk exposure for identified risk categories within permissible levels. In the period under review, the IRM committee has further developed the Dash Board which is in place for monitoring all trigger points based on identified risk categories. Meetings are held quarterly and minutes are forwarded to the Board consideration.

Audit Committee

Audit committee is accountable for directing the preparation, presentation and adequacy of disclosures in the Financial Statements of the Company and overlooking effectiveness of the Company’s internal controls to meet the requirements of the Sri Lanka Auditing Standards. Audit committee is headed by an independent Director and consists of Non-Executive Directors. During the financial year, audit committee has evaluated and recommended the enhanced disclosures for Financial Statements and addressed further improvements of internal controls.

Management Committees

Nomination Committee

The Nomination Committee is responsible for making recommendations on board appointments, and on maintaining a balance of skills and experience on the board and its committees. During the financial year under review, there were no new appointments to the Board.

Internal Audit

Internal audit will overlook the adherence to controls and procedures within CDB whilst ensuring the compliance and adequacy to meet the requirements of Sri Lanka Auditing Standards. It has directly reported to the Board of Directors via Audit Committee and reported to the CEO for the monitoring and controlling of internal procedures.

Asset Liability Committee

Headed by the Chief Financial Officer along with five members from Finance, Credit & Deposit operations divisions committee is responsible for monitoring and evaluating internal performance of liquidity, investments, pricing and asset liability maturities during the year, in achieving the strategic objectives of CDB, whilst complying with the regulatory requirements.

Compliance Committee

Compliance committee is exclusively responsible for regulatory adherence of the company and will overlook the compliance requirements imposed by all relevant regulatory authorities. Committee is headed by the Chief Operations Officer and other members comprise of Finance, Legal, Credit and Deposit operations.

Delegated Credit Committee

The Committee is responsible in formulating and executing strategies and policies during the year for the entire credit management function of the company. It comprises of revenue and non-revenue driven managers, who carry an equal responsibility for credit risk and ensure the segregation of business development and credit administration functions.