As an international financial enterprise serving a very wide range of customers and markets, Hypo Group Alpe Adria is exposed to a great variety of industry-specific risks. A groupwide, uniform, pro-active risk management system has therefore been introduced, with the principal objective of identifying risks in their early phases, so as to be able to apply appropriate countermeasures rapidly. Risk management evolves all the time, and its evolution is driven by the characteristics of the Bank’s regional markets.

5.1 Risk strategy, management and monitoring

The Hypo Group Alpe Adria manages and monitors the risks across its business areas with the aim of optimising its risk/ returns profile for all the various types of risk involved. The Hypo Group Alpe Adria applies the following key principles to overall risk management:

• The Board of Management establishes the risk strategy in line with business strategy and defines it precisely for the different types of risk by means of policies and business objectives. The Board is also responsible for, and monitors, risk strategy implementation.
• There are clearly defined processes and organisational structures in place for all types of risk with clear requirements in terms of the tasks, competencies and responsibilities incumbent on all those involved.
• Sales/trading activities and back office/settlement activities are functionally separated in order to avoid conflicts of interest.
• Compatible procedures are defined and implemented for the identification, measurement, aggregation and monitoring of the various types of risk.
• Appropriate limits are set and monitored effectively for all key types of risk.

The Board of Management takes important and strategic riskrelated decisions itself. All operational decisions are delegated within the framework of defined tasks, competencies and responsibilities.