Feature
Strong risk management culture guides us through financial crises
Strong risk management culture guides us through financial crises
The events leading up to the current crisis in global financial markets have resulted in considerable volatility in North America, Europe, Asia and many emerging economies, affecting households, businesses, governments and investors around the world.
These events strongly demonstrate that prudent risk management and responsible lending and investment practices - trademarks of Scotiabank which helped the Bank largely avoid the severe consequences faced by many of the world's largest financial institutions - are crucial to creating sustainable financial institutions and honouring the principles of corporate social responsibility.
Well known for our robust risk management culture, Scotiabank continues to focus on containing risk in this environment by having the right people, procedures and controls and by executing effectively. This means knowing our customers, constantly monitoring our current risk exposure and escalating issues quickly, if necessary.
In addition to the Bank's disciplined risk management culture, a focus on leadership and three diversified growth platforms (Canadian Banking, International Banking and Scotia Capital), we maintain strong capital ratios, as well as a solid record of generating superior returns.
In light of our position within the financial services sector, Scotiabank works closely with the Bank of Canada, the Minister of Finance and the industry, as well as government authorities in other countries where we do business, to develop meaningful long term solutions to common issues. In addition, Scotiabank is working with the Institute of International Finance, through a committee of international bankers co-chaired by Scotiabank President and CEO Rick Waugh, to develop voluntary measures to help strengthen practices in the financial industry.
Internally, we are continuously working to enhance processes, controls and communications to ensure any relevant lessons are applied within our organization. This diligence and scrutiny, along with a continued commitment to our corporate values, will enable us to satisfy the needs of our stakeholders for many years to come.
In varying degrees, risk is present in virtually all of Scotiabank's business activities - so effective risk management is fundamental to the Bank's success. We want to ensure that the outcomes of our risk-taking activities are predictable and consistent with the Bank's objectives and risk tolerance, and that there is an appropriate balance between risk and reward, in order to maximize shareholder returns.
The Bank has a comprehensive risk management framework in place - including policies and limits, guidelines, processes and standards, and measurement and reporting - to monitor, evaluate and manage the principal risks assumed in conducting its activities. These include credit, market, liquidity, operational, reputational and environmental risk.
The effectiveness of the framework is enhanced by strong governance, which includes the active participation of the Board of Directors, senior executives and business line management. Furthermore, Internal Audit independently monitors the effectiveness of our risk management policies, procedures and internal controls. Further information about the Bank's risk management policies and framework is included in the annual report, available at Scotiabank branches or www.scotiabank.com.
"Our strong risk management culture is critical to our success. It's built on our deeply embedded values, our solid corporate governance structures, a stringent system of procedures and controls, and effective execution by our people. At Scotiabank, everyone is a risk manager, from the business lines to the many functional groups that support them. The strength of our people is crucial because no matter how many controls are in place, people ultimately have to exercise good judgment."
Brian Porter, Group Head, Risk & Treasury
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