To ensure effective and smooth operation in the increasingly turbulent and uncertain situation it is necessary to monitor potential risks and to manage them appropriately. SEF has established a Risk register, which is associated with both strategic documents and annual plans and reports. With help of clearly defined business processes, measurable objectives and monitored results and identified deviations, SEF continuously monitors the risk in all areas of operation SEF also has defined credit and operational risks.
In accordance with the adopted Rules on credit risk management the SEF:
- on the basis of its own developed methodology evaluates the potential risk even before the start of the implementation of the financial instrument and defines the necessary financial sources for the creation of special reserve funds (guarantee funds, loan funds, …),
- continuously evaluates the credit rating status of applicants and proposes a classification of potential beneficiaries of financial support into rating classes with corresponding provisions,
- annually monitors and evaluates potential risks of actual debtors and creates current provisions,
- in the case of outstanding commitments by the debtors are the net potential losses covered by the created provisions,
- in the event of a released provisions due to the repayment of liabilities by debtors or a drop of in the level of risk of each debtor, the released provisions are returned to the provision funds and constitute a new source of financial incentives for a future period (revolving).
Operational risk originates from an inadequate or unsuccessful implementation of internal processes, the handling from people and functioning of systems or external factors and depends on the internal organization, business processes, methods of operation of internal controls, the effectiveness of internal and external audits, … The operational risk factors are personnel, business processes, information technology and other infrastructure, organisational structure and external events. The management of operational risk is based on the established system of internal controls, the appropriate qualified personnel and investments in information technology.
SEFs experience from the past shows that with the increased role as the central financial institution to support SMEs, with annual increasing scale of operations and gradually increasing complexity of products and processes, for the implementation of the strategy and, consequently, to achieve the objectives and the implementation of the two planned programmes, is for SEF in terms of the organization necessary to adapt its internal systemization and organizational structure. In order to avoid exposure to operational risk the personnel structure of SEF needs to currently adapt. It is also necessary for the SEF to adjust the existing information technologies to provide appropriate information and application support, which will the Fund continuously incorporate in the annual business and financial plans of the SEF.