Geschäftsbericht 2008 - NordFinanz Bank AG

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NordFinanz Bank Aktiengesellschaft, Bremen
Group Management Report for the 2008 Fiscal Year
Interest Rate Risk
Interest rate risk is calculated and monitored using
gap analysis as well as interest income statements.
Gap analysis is performed with regard to profit
contributions, changes in profit when the market
interest rate changes, and incremental borrowing
rates, and subsequently forwarded to the Management
Board.
We will continue to refine our instruments for
identifying and managing interest rate risk.
Other Market Price Risk
Other market price risk defines potential losses to
the Bank’s positions that may arise in the financial
markets as a result of changes in prices or price-influencing
parameters. To manage this risk, the Bank
uses a software package that allows calculation of
day-to-day risk and determination of worst-case risk
for security transactions.
Currently, the Group refrains from investing in
stocks and other security trading. There is also no
currency risk since receivables and liabilities are
denominated in euros only.
Liquidity Risk
Liquidity risk is still managed on the basis of ratio
calculations as specified in the Liquidity Regulation
(Liquiditätsverordnung). The liquidity needed to meet
the minimum reserve is calculated on a continuous
basis. There is no apparent liquidity risk. As of the
end of December 2008, NF Bank AG’s liquidity ratio
was 1.17.
Operational and Legal Risk
According to the Solvency Regulation (Solvabilitäts-
verordnung), operational risk is defined as a risk of
loss resulting from inadequate or failed internal processes,
people and systems, or from external events.
To illustrate its risk situation, the Bank currently
uses what is known as the basic indicator approach.
Furthermore, existing operational risk was identified
as part of a risk audit. Since January 2008, data
history has been compiled to set up a loss database.
To mitigate any potential IT operating risk, the IT
systems are tested at regular intervals for proper
technical functioning and with respect to business
continuity processes.
Legal risks and recent legal developments such as
legal matters concerning the Group or any decisions
by consumer protection associations are continuously
monitored by the Legal department or the
Management Board, if required, and limited by the
use of standard wordings in contracts and a requisite
framework.
Risk Control
Risk management is one of the Group Management
Board’s primary responsibilities. The recording, communication,
and monitoring of risk is the task of the
Controlling department.
Since March 2008, calculations regarding risk-taking
potential, risk budget, risk position, and riskbearing
capacity have been performed and continuously
improved.
To document control activities and communicate