Risk management
Risk Management is managed by Gísli S. Óttarsson, Chief Risk Officer. The division is an independent unit and reports to the CEO. Risk Management had 28 employees at the end of 2014.
Risk Management is divided into five departments.
Credit Analysis monitors and supports the Bank’s credit decisions and credit granting processes from loan application to loan disbursement. The department is Risk Management’s primary interface with the Bank’s credit committees and prepares comments on all credit applications that are submitted to the Board Credit Committee (BCC) and the Arion Credit Committee (ACC).
Credit Control monitors weak and impaired credit exposures on a customer-by-customer basis, determines the appropriate level of provisioning and reports provisioning and write-offs to the ACC.
Economic Capital is responsible for the design and implementation of the Bank’s Internal Capital Adequacy Assessment Process (ICAAP) and interfaces with the Financial Supervisory Authority (FME) in the Supervisory Review and Evaluation Process (SREP). The department is responsible for the development of the Bank’s economic capital model, which is the basis for the internal assessment of capital requirements.
Portfolio Risk is responsible for analyzing, monitoring and reporting on risks resulting from balance sheet mismatch, including liquidity risk.
Operational Risk monitors risks associated with the daily operation of the Bank.
The Bank’s Security Officer is a part of Risk Management and his main task is to devise a strategy on security issues, supervise security issues and report to the Security Committee and the Executive Management. The Security Officer is also responsible for the Bank’s contingency plans.
Further information on the Bank’s risk management is provided in the section on Risk Management and in the Pillar 3 Risk Disclosures 2014 report.
COMPLIANCE
The Bank employs an independent Compliance Officer in accordance with a charter from the Board of Directors. The role of the Compliance Officer includes the following:
- To monitor and regularly assess the adequacy and effectiveness of measures and actions designed to minimize the risk of failure to fulfil the Bank’s obligations under the Securities Transactions Act and the Act on Measures against Money Laundering and Terrorist Financing.
- To provide the employees of the Bank with the necessary training and advice to enable them to fulfil their and the Bank’s obligations under the Securities Transactions Act and the Act on Measures against Money Laundering and Terrorist Financing.
- To investigate and notify the police of any suspicion of money laundering or terrorist financing and notify the FME of any suspicion of market abuse. The Compliance Officer also conducts independent investigations if there is any suspicion of a violation of the Competition Act.
The Compliance Officer reports directly to the CEO and provides the CEO with regular reports about his work. The Compliance Officer gives the Board of Directors an annual report and also reports to the Board Audit and Risk Committee on a quarterly basis. The Compliance Officer may refer cases directly to the Board if deemed necessary. The Compliance Officer also undertakes outsourced tasks from Stefnir hf. and certain pension funds.
The Compliance Officer of Arion Bank is Hákon Már Pétursson and Compliance had six employees at the end of 2014.
Internal Audit
The Internal Auditor is appointed by the Board of Directors and reports directly to the Board. The Board sets the Internal Auditor a charter which lays out the responsibilities associated with the position and the scope of the work. The mission of the Internal Auditor is to provide independent and objective assurance and advice designed to add value and improve the Bank's operations. The scope of the audit is the Bank, its subsidiaries and pension funds serviced by Arion Bank. The audit is governed by the audit charter, directive No. 3/2008 issued by the FME on the internal audit function in financial institutions and international standards on internal auditing. All audit work is completed by issuing an audit report with deadlines for the implementation of audit findings. Implementations are followed up by the Internal Audit every quarter.
Internal Audit had eight employees at the end of 2014. The Internal Auditor is Lilja Steinthórsdóttir.
Customers' Ombudsman
The Customers’ Ombudsman is appointed by the Chief Executive Officer. The role of the Ombudsman is to ensure fairness and objectivity, prevent discrimination against the customer and make certain that the process for handling cases is transparent and documented.
The Customers' Ombudsman examined 202 cases in 2014, compared with 186 cases in 2013. The Customers' Ombudsman is Helgi G. Björnsson.
