INTEGRATED RISK MANAGEMENT

COMMITTEE REPORT

Committee Composition during 2023

The composition of the committee
during the year 2023 was as follows:

Mr R M Priyantha Rathnayake

Chairman/Non-Independent Non-
Executive Ex-officio Director

Mr Ronald C Perera, PC

Member/Independent Non-Executive
Director

Major General (Rtd)

G A Chandrasiri VSV
Member/Independent Non-Executive
Director*

Mr Naresh Abeyesekera

Member/Independent Non-
Executive Director Appointed w.e.f
09.05.2023

Note
* Major General (Rtd)

G A Chandrasiri VSV
ceased to be a Director w.e.f
07.01.2024 with the ending of his
term of office on the Board of Bank of
Ceylon.

Secretary to the Committee

The Secretary, Bank of Ceylon/ Secretary
to the Board, Janaki S Siriwardane who is
an Attorney-at-Law and a Senior Deputy
General Manager, functions as the
Secretary to the Committee.

Regular participants

•

General Manager

•

Chief Risk Officer

•

Chief Internal Auditor

•

Deputy General Manager (Compliance)

•

Chief Information Security Officer

Any other members of the Board/
Corporate Management/ Executive
Management any other Staff Member
invited by the Committee.

Meetings held in 2023: 06
(Attendance given on page 116 of this
Report)

Quorum:

members

ROLE OF COMMITTEE

The Terms of Reference (TOR) of the
Integrated Risk Management Committee
are governed by the Committee Charter,
approved and adopted by the Board.

The Committee also ensures that the
scope and coverage of its functions
addresses the requirements of the
Banking Act Direction No. 11 of 2007
on “Corporate Governance for Licensed
Commercial Banks in Sri Lanka” and its
subsequent amendments issued by the
Central Bank of Sri Lanka.

This includes reviewing and/ or
recommending the following which are
identified in the Charter of the Integrated
Risk Management Committee:

•

Policies, programmes and
Management Committee Charters
relating to risk management and
compliance.

•

Risk limits and policies that establish
appetite for credit, market, liquidity,
operational, information security and
other risks, as recommended by the
Chief Risk Officer.

•

Adequacy and effectiveness of all
Management level committees to
address specific risks and to manage
those risks within quantitative and
qualitative risk limits as specified by
the Committee.

•

Risk management reports on the risk
profile of the Bank including overseas
branches and subsidiaries, as well as
current market and regulatory risks
and actions undertaken to identify,

measure, monitor and control such
risks.

•

Corrective action to mitigate the
effects of specific risks in case
such risks are beyond the prudent
levels decided by the Committee
on the basis of the Bank’s policies
and regulatory and supervisory
requirements.

•

Adequacy and effectiveness of
risk identification, measurement,
monitoring and mitigation relating to
credit, market, liquidity, operational,
Information Security and compliance
risks.

PRINCIPAL FOCUS

To assist the Board in fulfilling its
oversight responsibilities for all aspects
of risk management. In this connection
the Committee focuses on and reviews
credit, market, liquidity, operational,
Information Security and strategic risks
through appropriate risk indicators and
management information.

MEDIUM OF REPORTING

The proceedings of the Integrated Risk
Management Committee meetings are
tabled and ratified at the Board meetings
and Board approval obtained thereof.

AREAS OF FOCUS AND

ACTIVITIES IN 2023

Risk limits – Continuously monitored the
exceptions to the Committee approved
Risk Appetite of the Bank through risk
reports submitted by the Risk Division.
The exceptions to the limit management
framework established at the Bank were
strictly monitored with course of action
proposed by the management to validate
the suitability of them.

Policies and procedures - All policies
related to risk, including foreign branch
policies were recommended to the
Board with relevant changes requested
by either business or regulatory needs

for the approval of the Board. Reviewed
and revised the Terms of Reference of all
Management level Committees dealing
with specific risks or some aspects of risk.
Effectiveness of all management level
Committees of the Bank were evaluated
against its respective objective to ensure
that they remain and carry out its tasks
according to the mandate of each
committee.

Liquidity

•

Utmost priority was given to
managing the liquidity position of
the Bank, lengthy deliberations
were done on liquidity position
reports. Unconventional and novel
strategies, special teams and tasks
were recommended to ensure that the
Bank remain steady in a challenging
economic scenario.

•

Special mechanisms established
during 2022 were further strengthened
safeguarding the liquidity positions of
the Bank.

•

Special emphasis was given to the
requests of the SOEs to complete
the tasks with national interest.
Continuous follow up were done
through the committee to assess
the appropriateness and viability of
accommodating the business with
them while safeguarding the stability
of the Bank.

•

Asset quality - Year under review

called for special attention on
deteriorating credit quality levels
given the challenging economic
position faced by the country.
Deliberations on asset quality were
multifaceted. A comprehensive plan
to curtail increasing non-performing
advances were formulated while
monitoring the credit quality through
the credit quality units with strict
monitoring and regular reporting.
Special emphasis on revival of
underperforming segments and
customers were focused with a view
to arresting deterioration of credit
quality.

•

Compliance - Assessed the
compliance risk issues emphasised
in the branch network as well
as the divisions and suggested
suitable strategies to mitigate same.
Compliance risks of subsidiaries were
monitored through frequent reports
and suitable strategies were validated
to be implemented.

•

Committee continuously monitored
the progress of the implementation
of the goAML, which is the
regulatory reporting platform
required by the regulator.

•

Comprehensive risk reviews of
subsidiaries were done to ascertain
its risk profile and necessary
recommendations were made to
ensure that they remain as per the
risk mandate of the Bank.

•

Internal Capital Adequacy

Assessment Process (ICAAP) and

Recovery Plan

•

Reviewed and recommended
the ICAAP of the Bank of Ceylon
Group with a view to maintaining
adequate capital levels to
accommodate Pillar II risks and
withstand any unforeseen but
plausible events which were
highlighted in the stress testing
process of the Bank.

•

Subsequent follow ups on alert and
trigger events were discussed in
detail with remedial actions taken
by the management.

•

The possible impact of the
sovereign debt restructuring, assets
quality review of the independent
consultant and restructuring
of State-Owned Enterprises
(SOEs) were critically analysed
for assessing additional capital
requirement.

ESMS initiatives – Rolling out the Bank’s
Environmental and Social Management
System Policy across Business Units and
Branch Network.

Information security/IT Risk – The
implementation of robust information
security and IT Risk management
measures to ensure seamless banking
experience to the customers while
ensuring confidentiality and integrity
of sensitive data has been the highest
priority. In order to sustain and thrive in
the banking service domain, a globally
accepted IT Governance framework
“COBIT 2019” implementation was
commenced.

CONCLUSION

The Integrated Risk Management
Committee remains steadfast in its
commitment to safeguarding the Bank
of Ceylon’s financial integrity. The
comprehensive risk mitigation strategies,
coupled with proactive measures
position the Bank well to navigate
challenges ahead. The Committee
would collaborate, adapt and grow and
be resilient in the pursuit of sustainable
growth in an ever-evolving banking
landscape.

Mr R M Priyantha Rathnayake
Chairman,
Integrated Risk Management Committee

19 February 2024

Note:
*

Mr Ronald C Perera PC ceased to be a
Director w.e.f 13.03.2024 with his resignation
from the Board of Bank of Ceylon.

With the appointment of new members to
the Board in 2024, the present Committee
comprises of the following members,

(i) Mr Jehaan Ismail

Chairman/ Independent Non-Executive
Director

(ii) Mr R M Priyantha Rathnayake

Member/ Non-Independent Non-Executive
Ex-officio Director

(iii) Mr Naresh Abeyesekera

Member/ Independent Non-Executive
Director

(iv) Mr Jayamin Pelpola

Member/ Independent Non-Executive
Director