BIMB Integrated Annual Report 2017

45. FINANCIAL RISK MANAGEMENT POLICIES (CONTINUED) 45.4 Market risk (continued) (a) Banking (continued) Management of market risk The objective is to manage market risk exposures in order to optimise return on risk while maintaining a market risk profile consistent with the Bank’s approved risk appetite. Bank Islam’s market risk exposures are managed by its Treasury, who have the necessary skills, tools, management and governance to manage such risks. The management of market risk is guided by detailed limits, policies and guidelines which are periodically reviewed. The Bank’s Market Risk Management Department (“MRMD”) is the independent risk control function, and is responsible for the implementation of market risk management policies. The Bank’s MRMD is also responsible for developing the Bank’s market risk management guidelines, monitoring tools, behavioural assumptions and limit setting methodologies. Escalation procedures are documented and approved by the ALCO and/or BRC. In addition, the market risk exposures and limits are reported to the Bank’s ALCO and BRC. Other controls to ensure market risk exposures remain within tolerable levels include stress testing, rigorous new product approval procedures and a list of permissible instruments that can be traded. Stress test results are produced regularly to determine the impact of changes in profit rates, foreign exchange rates and other risk factors on the Bank’s profitability, capital adequacy and liquidity. The stress test provides the Bank’s Management and the BRC with an assessment of the financial impact of identified extreme events on the market risk exposures of the Bank. (i) Profit rate risk The table below summarises the Bank’s exposure to profit rate risk. The table indicates average profit rates at the reporting date and the period in which the financial instruments reprice or mature, whichever is earlier. NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 262 BIMB HOLDINGS BERHAD Integrated Annual Report 2017