FINANCIAL INFORMATION AND RISK MANAGEMENT
TÜRKİYE İŞ BANKASI A.Ş.
Notes to the Unconsolidated Financial Statements for the Year Ended
31 December 2012
ANNUAL REPORT 2012
Quantitative information on counterparty risk
Equity-Shares Related Contracts
Gross Positive Fair Values
Net Current Exposure Amount
Net Derivative Position
IV. Explanations on Operational Risk
Operational risk is defined in general as “the risk of loss that may be arising from inadequate or ineffective internal processes, people,
systems or other external factors”.
The classification of operational risks that might be encountered during the activities is followed by preparing the “Risk Catalog of the Bank”.
This Risk Catalogue is the basis to be used in the definition and classification of all risks that may be exposed to and is updated parallel to
the changing conditions.
The principles on specifying, defining, evaluating, measuring, monitoring, controlling and reporting the operational risk and the
responsibilities regarding operational risk management are stated in the “Operational Risk Policy”.
In the assessment of operational risk, “Self-Assessment Methodology” is applied. This method requires identifying the risks through the
participation of the personnel who is responsible for undertaking the operation. Both qualitative and quantitative methods are used in the
measurement and evaluation of operational risk. Information derived from the “Impact-Likelihood Analysis” and “Lost Case Data Analysis” is
used in the measurements.
All the operational risks that are carried during the operations, the risk levels of the operations and/or new products/services, together with
the losses of the Bank arising from operational risks are regularly monitored by the Risk Management Department, and if deemed necessary,
the risk levels are updated and periodically reported to the Risk Committee and the Board of Directors.
The operational risk, to which the Bank is exposed, is measured using the Basic Indicator Approach in which the average of 15% of the year-
end gross income of the last three years is multiplied by 12.5, in line with the domestic regulations. The operational risk amount used for the
current period is TL 11,176,474 (31.12.2011: TL 11,275,425).
The information contained in the following table when using the basic indicator method:
2 PP Amount
1 PP Amount
of years of
Value at operational risk
V. Explanations on Currency Risk
Foreign currency position risk for the Bank is a result of the difference between the Bank’s assets denominated in foreign currencies
and indexed to foreign currencies and liabilities denominated in foreign currencies. Furthermore, parity fluctuations of different foreign
currencies are another element of the currency risk.
The currency risk is managed by the internal currency risk limits which are established as a part of the Bank’s risk policies. The Assets and
Liabilities Committee and the Assets and Liabilities Management Unit meet regularly to take the necessary decisions for hedging exchange
rate and parity risks within the framework of the limits determined by the “Net Foreign Currency Overall Position/Shareholders’ Equity” ratio
which is a part of the legal requirement and limits specified by the Board of Directors. Foreign exchange risk management decisions are
In measuring currency risk, both the Standard Method and the Value at Risk Model (VAR) are used as applied in the statutory reporting.
Measurements made within the scope of the Standard Method are carried out on a monthly basis and form the basis of determining the
capital requirement for hedging currency risk.