Annual Report 2004

The strategic measures are complemented
by tactical benchmarks,
which are defined at the regular
meetings of the responsible investment
committee for shorter periods
to reflect short-term market developments
and the like. Interest rate
risk is managed on the basis of duration
targets or limits.
Credit Risk
Credit risk is the risk of incurring a
loss due to the failure of a counterparty.
Here, risk management relies
on a credit risk limit system which
documents current credit risk limits
and actual exposure. Credit risk
reports reflecting this information as
well as information derived from
monitoring developments in financial
markets are discussed thoroughly at
regular investment committee meetings
and are reviewed at annual intervals
by the Governing Board.
Liquidity Risk
Liquidity risk is the risk arising from
a counterpartyÕs inability to meet its
financial obligations in time or in full
or the risk that the OeNB may not
dispose of sufficient funds to meet
its obligations. To avoid this risk,
the OeNB selects counterparties with
a high credit standing and strictly
applies the established limits, with
a particular emphasis on security
and liquidity. These principles take
precedence over profitability considerations.
Operational risk
Operational risk is the risk of incurring
losses due to defects, inadequate
procedures or systems, human error
or unforeseen events affecting operations.
The OeNB has set up adequate
risk controls, as laid down in its risk
management handbook ORION —
Handbuch Risiko- und Krisenmanagement
(ORION stands for Operationales
Risikomanagement in der
Oesterreichischen Nationalbank —
operational risk management at the
Oesterreichische Nationalbank). Valuation
takes into account the impact
of various risk scenarios on the
OeNBÕs reputation, costs and any
losses. Risk valuation is an ongoing
process, and reports are submitted
to management every half year.
Financial Statements
Annual Report 2004 ×
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