Enterprise Risk Management at ING Group|Enterprise Risk Management|Case Study|Case Studies

Enterprise Risk Management at ING Group

            
 
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Case Details:

Case Code : ERMT-013
Case Length : 14 Pages
Period : 2003
Pub Date : 2003
Teaching Note :Not Available
Organization : ING Group
Industry : Finance, Banking
Countries : The Netherlands

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Excerpts

Overview of Risks

ING had put in place comprehensive risk management procedures at all levels within the Group. At the Executive Board level, the Risk Policy Committee evaluated and managed the Group's overall risk profile, aiming for the right balance between risk, return and capital...

Credit Risk

Credit risk was the risk of loss due to default by a debtor or counterparty. Credit risk arose in lending, investment and trading activities. ING's credit risk management was supported by general information systems and debtor and counterparty internal rating methodologies. ING's internal risk rating models had been converted from a ten-risk class scale to a twenty-two risk class scale to meet the future requirements of the new Basel II capital accord.

The banking credit portfolio was constantly reviewed. A formal analysis took place on a quarterly basis to determine the provisions for possible bad debts...

Enterprise Risk Management | Case Study in Management, Operations, Strategies, Enterprise Risk Management, Case Studies

Country Risk

Country risk was the risk that ING faced due to events in a specific country or group of countries. Country risk arose in various lending, trading and investment activities. Many transactions and trading positions generated by ING Bank had a country risk. Country risk was further divided into economic and transfer risk. Economic risk was the risk relating to any event in the risk country that might affect transactions and other exposure in that country, regardless of the currency...

Market Risk

ING applied Value-at-Risk and stress-testing scenarios to manage market risk. Value-at-Risk measured the maximum overnight loss that could occur under normal market circumstances due to changes in risk factors (e.g. interest rate, foreign exchange rate, equity prices) if the trading positions remained unchanged for a time interval of one day.

Apart from market risks in its trading portfolios, ING Bank had a structural interest rate risk on its balance sheet...

Liquidity Risk

ING closely monitored its liquidity risk to maintain an adequate cushion to meet its financial liabilities when due. Liquidity risk was managed at Group and local level by a combination of existing investment mandates, guidelines for asset and liability management, specific limits for certain business units and treasury policies and procedures...

Operational Risk

ING's policy was to manage operational risks through clear governance, an embedded operational risk management function, and the implementation of comprehensive operational risk identification, measurement, monitoring and mitigation processes. All business managers were responsible for establishing specific internal policies, procedures and controls and for continuously monitoring and controlling operational risks...

Exhibits

Exhibit I: ING Bank Risk Classes
Exhibit II: ING Group Additions to the Provision for Loan Losses (Based on Risk Country)
Exhibit III: ING Group Lending By Geographical Area
Exhibit IV: Economic Exposure by Country
Exhibit V: Largest Cross-Border Lending Exposures in Emerging Markets
Exhibit VI: ING Group Value at Risk by Category
Exhibit VII: ING Group Client Concentration
Exhibit VIII: ING Group Operational Income by Geographical Area
Exhibit IX: ING Group Geographical Distribution of Gross Premium Income
Exhibit X: ING Group Share Price Movement
Exhibit XI: ING Group Ten year Financial Highlights
Exhibit XII: ING Group Operations Result


 

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