Letno poročilo 2009.pdf - UniCredit Banka Slovenija dd

Legal RisksBanks are highly regulated financial institutions and constantly supervised by competent authorities as they bring and bear systemic risk.Legal and compliance risks represent risks of loss of earnings arising from violations or non compliance with laws, by-laws, rules, regulations,agreements, prescribed practices, or ethical standards. The Bank faces the legal methodology risk, which is the risk that the methods adoptedand steps taken to protect the Bank’s assets against claims by others or to protect against liability to pay damages or compensation to othersare inadequate. In addition, the Bank is subject to operational legal risk which arises, in the course of the conduct of the Bank’s commercialoperations, that it incurs obligations or liabilities that were not foreseen, or are greater than were foreseen or that its rights and claims prove tobe fewer, or of a lower value, than had been expected.Our objective is to identify, manage, monitor and mitigate legal risks throughout the Bank. We seek to actively mitigate these risks byidentifying them, setting minimum standards for their management as well as ensuring compliance through proactive monitoring.The legal risk policy is implemented through identification and ongoing review of areas where legal risk is found to be present, throughallocation of responsibility for the development of procedures for management and mitigation of these risks and through establishing ofprocedures to monitor compliance, taking into account the required minimum standards.Legal and compliance risks cannot be entirely eliminated or avoided and they are hardly predictable. UniCredit Banka Slovenija d.d. is involvedin a very few legal proceedings, which are still pending.Business RiskBusiness risk is defined as adverse, unexpected change in business volume and/or margins that cannot be attributed to other risk types,resulting in fluctuations of revenues and costs, not considering extraordinary items. The changes in business volume result from unexpecteddevelopment of market trend, unexpected customer behaviour or new market participants/products.The calculation of business risk is based on an earnings-at-risk model using historical time series of revenues and costs.Business risk measurement thus measures the influence of external factors on decline in profits and effect on market value.As part of the general income and cost management, the operational management of business risk is the responsibility of individual businessunits.Risks Arising from the Bank's Shareholdings and Equity InterestsUniCredit Banka Slovenija d.d. is not actively making long-term investments in shares on its own account for the purpose of realizing shorttermtrading or long-term substantial value increases. The shareholdings of the Bank are either closely related to the Bank’s business (SWIFT;Bankart etc.) or the result of restructuring attempts (out of loans and reverse repo transaction). Hence, UniCredit Banka Slovenija d.d. sees noneed for an active risk management approach.Real Estate RiskUniCredit Banka Slovenija d.d. only has a minor exposure in real estate financing and does not invest in real estate itself.Information According to Pillar 3In line with the regulation on the Pillar 3 and the fact that UniCredit Banka Slovenija d.d. is consolidated into the UniCredit Group, the Bankhas to disclose the following information on capital management, available funds and capital requirements for different risk categories.UniCredit Bank · 2009 Annual Report 225