of April 15, 2006 No. 94
About approval of Methodical recommendations about the organization of risk management systems and internal control in bank holdings
For the purpose of forming in bank holdings of adequate risk management system and internal control the Board of the Agency of the Republic of Kazakhstan on regulation and supervision of the financial market and the financial organizations (further - the Agency) DECIDES:
1. Approve the enclosed Methodical recommendations about the organization of risk management systems and internal control in bank holdings.
2. This resolution becomes effective from the date of its acceptance.
3. To department of strategy and analysis (Edenbayev E. S.) in seven-day time from the date of acceptance to bring this resolution to the attention of the interested divisions of the Agency, banks of the second level, Consolidation of legal entities "Association of financiers of Kazakhstan".
4. To department of the international relations and public relations (Pernebayev T. Sh.) take measures to the publication of this resolution in mass media of the Republic of Kazakhstan.
5. To impose control of execution of this resolution on the vice-chairman of the Agency Bakhmutova E. L.
Chairman A. Dunayev
Approved by the Resolution of Board of the Agency of the Republic of Kazakhstan on regulation and supervision of the financial market and the financial organizations of April 15, 2006 No. 94
These Methodical recommendations are developed according to the Law of the Republic of Kazakhstan "About banks and banking activity in the Republic of Kazakhstan" and are intended for preparation by persons wishing to become bank holding of the documents confirming availability of risk management systems and internal control including concerning the risks connected with activities of the affiliated organization.
1. The purpose of these Methodical recommendations is forming in bank holdings of the adequate risk management system and internal control providing application by bank holdings of control methods of the risks providing effective determination, assessment and restriction of risks of bank holdings taking into account type and amount of the operations performed by them.
2. The main types of risks arising when implementing of the activities by bank holding:
1) currency risk - the risk of emergence of expenses (losses) connected with change of the foreign exchange rates when implementing of the activities by bank holding;
2) investment risk - risk of emergence of expenses (losses) owing to impairment of the capital investments connected with changes of their profitability;
3) credit risk - risk of emergence of expenses (losses) owing to violation by the client of initial terms of the contract (contract) on execution of the undertaken monetary commitments by it when carrying out bank loan, leasing, factoring, forfaiting, transactions on issue of bank guarantees and other transactions;
4) operational risk - risk of emergence of expenses (losses) as a result of shortcomings or mistakes during implementation of internal processes made from employees, functioning of information systems and technologies and also owing to external events;
5) legal risk - risk of emergence of expenses (losses) owing to violation of requirements of the legislation of the Republic of Kazakhstan by bank holding or discrepancies of activities of bank holding to its internal documents, and in the relations with nonresidents of the Republic of Kazakhstan - legislations of other states;
6) industrial hazard - the risk of emergence of expenses (losses) connected with production, realization and postrealizable servicing of products (services);
7) interest risk - risk of emergence of expenses (losses) owing to adverse change of rates of remuneration;
8) reputation risk - risk of emergence of expenses (losses) owing to negative public opinion or decrease in trust to bank holding;
9) risk of loss of liquidity - the risk connected with possible failure to carry out or untimely accomplishment of the obligations by bank holding;
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