ECIC IR 2023

Integrated Report 2023

E

D

H

S

I

L I

N

B

2

0

A

0

T

S

1

E

E X P O R T C R E

L T D

O C

A S

C

R I

D I

F

T

A

I

N

H

S

T

U

U

R

O

A

S

N

F

C

O

E

N

C

O

O

I

R

T

P

A

O

R

Risk Management

Risk framework ECIC has an elaborate risk framework that comprises a suite of policies, procedures and processes that holistically seek to manage risk within the Corporation’s risk appetite. The Corporation’s strategic themes include sound risk management that ensures the Corporation remains sustainable in both the short and long run. Global trends in a post-COVID world are important in so far as a forward-looking assessment of risk eligibility in regions/geographies, sectors and obligors are concerned. The forward-looking tripwires and early warning signals have assisted the Corporation to identify potential high-risk opportunities and to put in place commensurate risk sharing/transfer mechanisms to fully eschew risk or to restrict risk to within acceptable levels. The Board composition in terms of skills and experience ensures that Board oversight remains effective in augmenting management decision making when the Corporation navigates difficult risk terrain. Regular interactions with regulatory bodies in the financial services sector have enabled the Corporation to embrace and institute sound risk management and compliance practices that ensures continued support to policy holders. ECIC Board risk oversight The Risk Committee of the Board exercises delegated oversight responsibility from the Board on all risk-taking opportunities of the Corporation. The Combined Assurance plan that incorporates role players across the three lines of defence, and monitored by both the Risk and Audit Committees has evolved over the years and provides varied risk perspectives to Board.

Risk management ECIC’s business landscape traverse different geographies and regions as well as industries and obligors. As a result, the Corporation strives to manage the various disparate risks that could be present in a single transaction, within the different risk categories. To ensure achievement of holistic view of risk, there is need to delineate all risks as set out below: Country risk The risk that an investor in a foreign jurisdiction may not be able to receive monetary value duly due to them from their investments and/or loans arising from acts of commission and/or omission by the host government constitutes country risk. As part of its country risk management strategy, the Corporation’s country risk assessment and management methodology combines qualitative and quantitative methods comprising of primary and secondary research, with the latter taking into account published material from multilateral development agencies (MDAs). The key metrics that underpin country risk assessments include economic and exchange control considerations, sovereign debt analysis and government policy. Underwriting risk Underwriting risk is an overarching risk that comprises several risks that vary between transactions. Some of the risks in this category include completion/construction risk, supplier or reserve risk, market risk and credit risk. The Corporation uses internal analysis and external expert analysis to assess and manage underwriting risk from transaction inception to end-of-life. Prudent management of the insurance book is achieved by adherence to the Corporation’s risk appetite limits and tolerance.

st

nd

rd

1

Line

2

Line

3

Line

Risk Function Head Actuarial Function (HAF) Compliance Function

Internal Audit External Audit

Business Processes

Figure 7: Integrated Assurance Model

YOUR EXPORT RISK PARTNER

74