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Risk Management

The Board acknowledges its overall responsibility for ALAFCO’s system of internal controls and Risk Management, while the role of executive management is to implement Board approved policies on the same.

Executive Management has implemented internal control and risk management systems designed to facilitate effective and efficient operations of ALAFCO. These systems are aimed at enabling ALAFCO to respond appropriately to significant risks that may arise during the course of its business activities.

It should be noted that the risk management and internal control systems are designed to manage, rather than eliminate, the risks that ALAFCO faces and can only provide reasonable, and not absolute, assurance against material misstatement or loss.

The Board is responsible for the risk management and internal control frameworks of ALAFCO. Executive Management is responsible for identifying risks and implementing appropriate mitigation and controls within their business.

An independent Risk Management and Compliance Department (RCD) reports directly to the Board Audit and Risk Committee and has unrestricted access to the Chairman of the Committee. RCD is responsible for designing and reviewing the process of risk management within ALAFCO.

ALAFCO’s Approach to risk management

ALAFCO derives its approach to risk management and control from a perspective of enhancing value. As a result, the risk management process takes a holistic approach to managing risks on an enterprise-wide basis. This involves focusing on the identification of the key risks that affect the achievement of ALAFCO’s objectives. Such risks are firstly understood on an inherent basis, which involves understanding the main drivers of such risks in the absence of any controls. Thereafter there is an assessment of the residual level of risks, taking into account the controls that are in place to manage such risks. Where the residual level is outside the acceptable limits, further controls and action are defined to bring the risks within the limits.

The Risk Management Framework of ALAFCO comprises of the following key elements:

  • a.    Risk Appetite Statement
  • b.    Risk Management Policy
  • c.    Risk Monitoring Plan
  • d.    Risk Reporting Framework
  • e.    Formal mechanism to identify, quantify and manage risks at inherent and residual level.
  • f.    Formal process for Risk and Control Self-Assessment (RCSA)