Effective risk management is fundamental to the business activities of Housing Finance Bank. While the bank remains committed to increasing shareholder value by developing and growing business within the board-determined risk appetite, it is mindful of achieving this objective in line with the interests of all stakeholders.

The bank seeks to achieve an appropriate balance between risk and reward in the business, and continue to build and enhance the risk management capabilities that assist in delivering growth plans in a controlled environment. Risk management is at the core of the operating structure of the bank. The bank seeks to limit adverse variations in earnings and capital by managing risk exposures within agreed levels of risk appetite. The risk management approach includes minimizing undue concentrations of exposure, limiting potential losses from stress events and ensuring the continued adequacy of all the financial resources.

The risk management processes has continued to prove effective throughout the year 2012, despite the tough economic environment. Executive management remained closely involved in important risk management initiatives, which have focused particularly on preserving appropriate levels of liquidity and effectively managing the risk portfolios.

Responsibility and accountability for risk management resides at all levels within the bank, from the board down through the organization to each business manager and risk owners.

Risks are controlled at the level of individual exposures and at portfolio level, as well as in aggregate across all businesses and risk types.