Risk management is an integrated tool of the Internal Capital Adequacy Assessment Process (ICAAP) within the OeKB Group and falls within the overall responsibility of the Board of Executive Directors.
The risk policy and strategy defined by the Board of Executive Directors is targeted at securing a sustainably stable equity yield rate and organic growth. The special position of the OeKB as an authorised agent of the Republic of Austria, its role as a central securities services provider and the responsibility for the Austrian national economy connected to it set the standards for a sound risk policy.
Approach
Thus an important quality characteristic of the corportate policy is the conservative approach to business and corporate risks, regardless of the fact if internal risks or risks managed on behalf of the Federal Republic are affected. In this context, due regard is also paid to profitability. The Internal Capital Adequacy Assessment Process has therefore been designed to meet the goal of regular operations as a going concern.
Measuring and controlling risks
The key factor in measuring and controlling risks is the economic capital; it is computed based on the value-at risk (VaR) concept over a one-year time horizon. The credit risk categories particulary taken into account in the ICAAP are credit risk, market risk and operational risks. In this context, risk is basically defined as the danger that the actual result will be lower than the expected result (unexpected loss). The liquidity risk is managed by monitoring the excess from allocating cash inflows and cash outflows to defined maturity bands.
In the risk coverage calculation the economic capital is compared to the risk coverage capital (internal or regulartory capital) by using a multi-tier system, which takes into account different risk hedging goals.