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  • Chapter Seven Risk Management

    • Article 35

      A Consumer Microfinance Company shall: 
             		 
       1.establish a clear written business strategy and a written risk management policy approved and updated annually by the board. The risk management policy should take into account all relevant types of risks and how to deal with them, taking into consideration all business activities, including outsourced operations and tasks;
       
       2.establish appropriate procedures to identify, assess, manage, monitor and communicate risks. These processes must be included in a comprehensive risk management framework that ensures:
       
        a.early and comprehensive identification of risks;
             		 
        b.assessment of correlations between risks; and
             		 
        c.immediate coordination with Senior Management, the Board, risk and credit management committee and the responsible staff, and where appropriate, the internal audit department.
             		 
       3.submit the risk report to its board.
       

    • Article 36

      The Consumer Microfinance Company must prepare a biannual risk report for discussion by the board or the competent committee, if any, after review by senior management. The report must include as a minimum the following: 
       
       1.a comprehensive overview of the risk development and performance of financial positions that incur market price risks as well as any instances in which the limits are exceeded;
       
       2.changes to assumptions or parameters which form the basis of risk assessment procedures;
       
       3.the performance of the finance portfolio by activity, risk class and size and collateral category;
       
       4.the extent of limits granted, external credit lines and default finance, which must be listed and commented on;
       
       5.analysis of the conditions in which the Consumer Microfinance Company exceeds the limits as well as the reasons for this, the scale and development of new business, and the company’s risk provisioning; and
       
       6.any major finance decisions which deviate from the strategies or policies of the Consumer Microfinance Company.
       

    • Article 37

      A Consumer Microfinance Company shall submit to SAMA the report referred to in Article (36) of this document, after being discussed and approved by the board or the competent committee, if any, along with the decisions made in this regard.