Risk Appetite Framework (RAF)JAPANESE

Positioning of the Risk Appetite Framework

The Risk Appetite Framework (RAF) is a group-wide corporate management framework consisting of the process for determining the type and level of risk (risk to be taken as a potential source of revenue, risk to be kept at or below a certain level, or risk to be avoided as a rule) within the Group’s risk capacity, in order to achieve the management strategies formulated by management based on the Group’s social role and management policies, together with the internal control system underpinning that process.
The Group’s RAF aims primarily to strengthen profitability and enhance risk management, and promotes the realization of these goals through environmental assumptions and risk awareness, increasing the transparency of risk taking process through the setting, communication, and oversight of risk appetite, appropriate allocation of management resources, and monitoring of operational status.

Operation of Risk Appetite

Determining Risk Appetite

The Group’s risk appetite is determined in accordance with the management plan, based on management strategies, risk culture, and verification through stress tests. The Group reviews its risk appetite as necessary, at least once per year.
In setting risk appetite, the Group identifies the major risks (risk characteristics), including credit risk, market risk, information security risk, and conduct risk, to which each business is exposed according to the nature of its operations.

Monitoring of Risk Appetite

The Group sets risk appetite indicators to clarify risk appetite, and monitors them regularly. If the risk appetite indicators deviate from the set levels, the Group analyzes the cause for the deviation and implements countermeasures or revises the levels.

Risk Governance

Risk governance, which forms a part of corporate governance, is a framework for identifying, measuring, managing, and controlling risks, as well as ensuring appropriate risk taking, by clarifying and monitoring risk appetite and risk limits.
The Group promotes the enhancement of risk governance, with the aim of achieving the sound development of the Group.
SuMi TRUST Holdings strives to enhance the operation of risk appetite through discussions at the Risk Committee and the Conflicts of Interest Committee, etc. as part of its initiatives to enhance corporate governance.

Fostering a Risk Culture that Takes Root across the SuMi TRUST Group

The Group defines risk culture as a basic philosophy that prescribes the codes, attitudes, and conduct of the Group’s organizations, as well as its directors, officers and employees, that flexibly carry out risk taking, risk management, and risk control based on an appropriate assessment of risks, guided by a high degree of selfdiscipline based on the fiduciary spirit.
In order to foster a risk culture that takes root across the Group, we are endeavoring to share and disseminate information regarding risk within the Group, through the delivery of messages from top management, training and education, and other measures. In addition, we have formulated a Risk Appetite Statement (RAS) clearly stating our RAF, which is used in lively discussions concerning risk appetite within the Group.

Outline of the Risk Appetite Framework

Risk Appetite Framework Operating System

 

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