Integrated Risk Management Committee Report

The Integrated Risk Management Committee was established as a committee of the Board in compliance with Finance Business Act Direction No. 03 of 2008 on corporate governance for Licensed Finance Companies issued by the Central Bank of Sri Lanka under Section 12 of the Finance Business Act No. 42 of 2011 with the following objectives:

1. For better circulation of risk management information.
2. A quicker implementation of action plans in response to accidents.
3. To ensure all departments play an active role in risk reduction and quality improvement.

The Committee lends a hand to the Board in fulfilling their oversight responsibilities with respect to decisions on risk appetite and makes sure that significant risks are competently managed. It clearly sets out the membership, source of authority, duties and responsibilities.

Composition and Appointment

The Board-appointed Integrated Risk Management Committee (IRM) as at the end of the year comprised of the following members:

Mr. D A De Silva (Chairman)
Mr. R Mohamed
Mr. W P C M Nanayakkara
Mr. R H Abeyagoonewardena
Mr. S V Munasinghe
Mr T M D P Tennakoon
Mr. W W K M Weerasooriya
Mr. N Imdaad
Mr. E Karthik
Mr. M B Heenkenda
Ms. N Kodagoda
Mr. H K Dasanayaka
Mr. H R Bandara

The members of the Committee include Chief Executive Officer, four Executive Directors and personnel representing Senior Management who are assigned to identified specific areas of risk encompassing credit, liquidity, operational, market, reputation, compliance, Information and communication technology, and strategic and the Committee is chaired by an Independent Director. The structure of governance matrix of the risks of the Company is as follows:

Responsibility	Level of Authority
	Board of Directors	Risk Management Committee	Management Committee
	Decide on the risk appetite of the Company	Formulates the risk policies and makes recommendations to the Board	Measuring and monitoring risk
	Ensure significant risks are managed accordingly with risk mitigation objectives discussed in the risk management section of the Annual Report	Ensure that the Company’s risk mitigation strategy is aligned to the risk appetite of the Company	Compliance with regulatory and supervisory requirements
		Overseeing the compliance of the operation with relevant laws, regulations, and standards to ensure conformance to all relevant rules and regulations	Benchmark with best practices
		Ensuring that the Board of Directors is kept aware of the Company’s risk exposure and ensure to mitigate those risks while achieving high level of performance	Executing policy framework approved by the Board.
		Review existing policies and procedures for mitigation of risks faced by the Company
		Making recommendations to the Board on risk management concerns

Committee Meetings

During the financial year under review, the Committee held four meetings on a quarterly basis. The discussions and conclusions reached at the meetings are recorded in minutes and circulated to the Board of Directors for information and advice on a quarterly basis. The Committee assesses all key risks such as credit, operational, market, liquidity etc., on a monthly basis through a set of risk indicators. The Committee continued to work very closely with the Key Management Personnel and the Board of Directors in fulfilling its statutory, fiduciary and regulatory responsibilities for risk management.

Committee Activities

The proposals of new products which were introduced during the financial year, were evaluated with regard to different risk areas before approving the implementation. Committee reviewed monthly reports on key risk indicators and management actions taken with regard to maintaining risk within Company’s risk appetite. The Committee also reviewed updates from the three management committees which are also involved in risk management namely ALCO, Compliance and Credit Committees. The Committee has regularly updated the Board on the performance of identified risk indicators and prudential limits defined and approved by the Board.

Committee Evaluation

The Committee evaluates its effectiveness annually and concluded its performance was effective.

(sgd.)
D A De Silva
Chairman
Integrated Risk Management Committee

2nd June 2014

Colombo