Home / Corporate Governance / Risk Governance and Management Framework

Risk Governance and Management Framework

Risk Governance Framework

As a financial intermediary, the Bank is exposed to various risks related to credit, market, liquidity, operation, technology, cyber, compliance, legal and reputation. The Bank is committed to managing material risks and participating in opportunities as part of the strategic approach of risk-calibrated growth in core operating profit excluding provisions.

The Bank’s risk management framework is based on a clear understanding of various risks, disciplined risk assessment and measurement procedures, and continuous monitoring. The Board of Directors has oversight on all the risks assumed by the Bank. Specific committees have been constituted to facilitate focussed oversight of various risks. Policies approved from time to time by the Board of Directors/Committees of the Board form the governing framework for each type of risk and business activities required to be undertaken within this framework.

A visual representation of the committees of the board responsible for overseeing various risks. The image includes four key committees: Risk Committee, Credit Committee, Audit Committee, and Information Technology Strategy Committee, each represented by an icon and connected with curved lines.
A visual representation of independent groups responsible for monitoring risks within the organization. The image highlights four key groups: Risk Management Group, Compliance Group, Internal Audit Group, and Financial Crime Prevention and Reputation Risk Management Group, each represented by an icon and connected with curved lines.

Further, groups and subgroups have been constituted across the Bank to facilitate independent evaluation, monitoring and reporting of various risks. The Bank has dedicated groups, namely the Risk Management Group, Compliance Group, Corporate Legal Group and the Internal Audit Group with a mandate to identify, assess and monitor all of the Bank’s principal risks in accordance with the defined policies and procedures. It also has the Financial Crime Prevention Group (FCPG) to oversee/handle fraud prevention, detection, investigation, monitoring, reporting and creating awareness about fraud risk management. All these groups function independently of the business groups/subgroups.

The Risk Management Group is further organised into the Credit Risk Management Group, Market Risk Management Group, Operational Risk Management Group and Information Security Group. The Group is headed by the Group Chief Risk Officer who reports to the Risk Committee of the Board of Directors.

The Bank has put in place an Enterprise Risk Management (ERM) and Risk Appetite Framework (RAF) that articulates the risk appetite and drills the same down into a limit framework for various risk categories under which various business lines operate. In addition, portfolio reviews are carried out and presented to the Credit and Risk Committees as per the approved calendar of reviews. As part of the reviews, the prevalent trends across various economic indicators and their impact on the Bank’s portfolio are presented to the Risk Committee. Analyses of various industries are also carried out and outcomes are presented to the Credit Committee for review and guidance.

The Internal Capital Adequacy Assessment Process (ICAAP) encompasses capital planning for a four-year time horizon, assessment of material risks and the relationship between risk and capital. Stress testing, which is a key aspect of the ICAAP and the risk management framework, provides an insight on the impact of extreme but plausible scenarios on the Bank’s risk profile and capital position.

To read more on Risk Governance Framework, please refer page 36-41 of ICICI Bank Annual Report 2023-24.

Previous Topic

Board of Directors and Expertise of the Board

Next Topic

Risk and Compliance Culture, and Values