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South African Reserve Bank

Risk management 

The South African Reserve Bank (Bank) is a risk-averse institution. Owing to the unique role and functions of the Bank, risk management is not solely based on risk and return considerations but also takes into account public interest in line with statutory and constitutional responsibility of the Bank.
The Bank has policies, processes and procedures in place to identify, evaluate, measure and report the financial risks that affect it in performing its functions and how such risks are managed. The Bank identifies, quantifies and evaluates the risks associated with its activities on a daily basis. The risk tolerance of the Bank, as far as reserves management operations are concerned, is specified and implemented through the Investment Policy (IP), the Strategic Asset Allocation (SAA), the risk budget framework and the investment guidelines. The framework for domestic markets operations is specified in the Operational Notice.
Risks faced by the Bank
The operations of the Bank constitute an essential element of meeting the Bank’s objectives and ensures its financial strengths. The Bank engages in banking activities which entail the investment of its foreign exchange reserves and gold, inter alia. Each of these investments may give rise to financial risks like credit risk, market risk and liquidity risk. Moreover, the Bank also faces exposure to operational risk.   Risk management policies are then designed to ensure that risks are identified, measured, controlled, monitored and reported. In this respect, the Financial Risk Management Policy and the IP capture the risks identified by the Bank and the parameters the Bank is prepared to tolerate, and the extent of risk taking.
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