Alior Bank’s risk report

Risk management is a crucial in-house process both at Alior Bank and at its foreign branch, as well as in all your Alior Bank Group subsidiaries. The overarching goal of the risk management policy is to ensure early recognition and adequate management of all material risks related to the Bank’s activities. The risk management system supports the delivery of the strategy and is aimed at ensuring adequate level of profitability and security of business, through effective control of the risk level and keeping it within the boundaries of the adopted risk appetite.  

The Bank recognises the following major risk to its business: 

Alior Bank’s risk management system is based on three independent defence lines: The first line is implemented at the Bank’s operational units and by process owners, who, among other things, design and ensure the compliance with the controls embedded in processes. The second line of defence operates in organisational units responsible for the management of particular risks. It fulfils a management function whereby risk management is delivered at dedicated stations or organisational units independently from the first line, and the activity of the compliance unit. The third line of defence provides the senior management and the Supervisory Board with assurance that the activities of the first and second lines are in line with their expectations. The third line of defence consists of the activities of the internal audit unit.  

In 2019, the bank has implemented a new Alior Bank Group Risk Management Policy which has increased the coherence between risk management rules applied by the Bank and its subsidiaries. The Bank has also conducted major organisational changes in the risk management area aimed at increasing the effectiveness of processes, strengthening control, and improving quality.  

The following risks are considered major risks by the Bank:  

• credit risk; 
• operational risk; 
• liquidity risk; 
• interest rate risk in the banking book; 
• market risk in the trading book (encompassing: interest rate risk in the trading book, currency risk, and commodity price risk).