Risk Management Framework

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Our Risk Management Framework (Framework) explains our core principles and the types of risks we face. The Framework forms the basis of our Risk Appetite Statement and our Risk Control Matrix.  It is a high level public document and is disclosed in our Annual Report and on our website.

Our Risk Appetite Statement (RAS) is not a public document as it describes in detail the manner in which our risk appetite and tolerance (qualitative and quantitative limits) are established and subsequently controlled. Risk appetite is a fundamental part of both risk management and capital management. Our approach to risk management and capital management is based around assessing the level of, and appetite for risk, and ensuring that the level and quality of capital is appropriate for that risk profile.

Similarly, the Risk Control Matrix (RCM) is not a public document as it sets out each of the risks we face along with mitigants we have in place and the people responsible for managing these risks. It also includes management’s ratings regarding the likelihood and consequences of each risk. By assigning practical responsibilities to team members and management, the RCM engenders a culture of risk awareness. Risks are classified depending on their nature: strategic, reputation, credit/country, market and operational/financial.

Core Principles of our Risk Management Framework

Our risk management is built on a foundation that includes:

  • an awareness and commitment to a single purpose, common principles, shared values and a Code of Conduct that are reviewed and renewed periodically
  • a suite of policies and procedures which are supplemented by supportive systems and processes
  • human resources practices intended to recruit, develop and retain employees with the required specialist skills
  • delegation of responsibilities throughout Export Finance Australia and accountability for outcomes
  • control processes including detailed management reporting, a system of independent review and Board oversight
  • an operational philosophy that seeks to anticipate and mitigate risks before they occur, and that reflects on the lessons learned when problems arise.

Roles and responsibilities

The Board is ultimately responsible for setting our risk appetite and tolerances. The Board Audit Committee is responsible for overseeing all aspects of risk management and internal control including compliance activity, the audit program, the appropriateness of financial reporting and performance reporting and the adequacy of accounting policies and procedures.

The Executive and senior management teams are responsible for implementing the Board approved risk management strategy and developing policies, processes, procedures and controls for identifying and managing risks in all areas of activity.

To assist with risk management, there are several committees that perform specific functions:

  • The Executive Committee, chaired by the Chief Executive Officer,  reviews large or complex exposures and potential transactions, and provides advice on matters of policy.
  • The Risk and Compliance Committee, chaired by the Chief Risk Officer, which examines, monitors and regulates compliance risks
  • The Treasury Risk Review Committee, chaired by the Treasurer, which examines Treasury activities, limits, noteworthy transactions and current issues
  • The Work Health and Safety Committee, chaired by the Chief Financial Officer, which examines all risks in the workplace (including in an agile environment) and reportsany hazards or safety problems that may cause harm or injury to employees, contractors and visitors.

The Board has engaged an independent internal audit service provider, currently Deloitte, to review risk management and internal controls. Deloitte report to each of the Board via the Board Audit Committee and the Executive team. They have full access to staff and information when conducting reviews.

The Australian National Audit Office (ANAO) and their appointed agent, currently KPMG, review independently our financial statements annually.

The Chief Financial Officer is responsible for the management of this Framework, including its regular review and renewal.

Types of risk

We maintain a comprehensive list of risks that we must manage across the business. This list results from internal consultation within the management team and is reviewed periodically. Risks fall into the following categories:

Strategic risk: the risk to income, expenses and capital or to product offerings as a result of ineffective corporate planning, specific government policy, trade policy, dividend policy, competitive neutrality policies or other legislative implications, or poor decision-making or implementation of those decisions.

Reputational risk: the risk of deterioration in our reputation arising from adverse publicity regarding our business practices, whether true or not.

Credit & Country risk: the risk that counterparties will default on obligations resulting in an expected or actual financial loss.

Market risk: the risk of any fluctuation in the value of a portfolio resulting from adverse changes in market prices and parameters including interest rates and foreign exchange rates.

Operational & Financial risk: the risk of loss resulting from inadequate or failed internal operational or financial processes and systems as well as the actions of people or from external events. We have grouped operational risks into a number of sub-categories:

  • General processes
  • External regulation
  • Internal policies
  • Domestic and international laws
  • Events.

Summary of Risks

Strategic risk

The framework within which strategic risk is managed is as follows:

  • The Board approves our Strategic Plan. The Strategic Plan provides an in-depth view of our purpose and principles, evaluation of our operating environment, significant business and operational risks and issues, SWOT analysis, strategic objectives, key initiatives and performance evaluation and benchmarking. The Strategic Plan is only for internal use and is prepared periodically.
  • The Board approves our Corporate Plan. The Corporate Plan is a annual document outlining the key business strategies and objectives identified from the Strategic Planning cycle with a particular focus on key performance indicators and financial projections over a four year period for both the Commercial Account and National Interest Account. The Corporate Plan is a public document and once approved by the Board, is sent to the Minister.
  • The Board approves our Annual Report. The Annual Report, including the annual performance statement, brings together our financial performance and our actual achievements against planned performance outlined in the Corporate Plan. The Annual Report is a public document and once approved by the Board, is sent to the Minister for tabling in Parliament.
  • Credit and market risk appetite are agreed by the Board at least annually after a review of the business environment and consideration of key risks.
  • The Board reviews strategies and performance in key functional areas, including when providing services to other Government agencies or departments, on a periodic basis.
  • Regular dialogue with the Government at Board and Senior Management level to address government policy, trade policy, dividend policy or other legislative implications.
  • Management reports financial outcomes monthly and our position against high-level key performance indicators quarterly.
  • Independent internal auditing and reporting to Management and the Board.
  • Independently audited financial reports are prepared annually.

Reputational risk

The framework within which reputational risk is managed is as follows:

  • The Corporate Responsibility Policy outlines engagement with key stakeholders and includes a Policy and Procedure for Environmental and Social Review of Transactions.
  • OECD mandated commitments on Export Credits such as the Arrangement on Officially Supported Export Credits; the Action Statement on Bribery and Officially Supported Export Credits; and the Common Approaches on Export Credits and the Environment.
  • The Export Finance Australia Act and the Code of Conduct under which employees are required, for example, to respect the confidentiality of information concerning Export Finance Australia and its clients.
  • The PGPA Act, which is a principles-based framework with rules and guidance, helps establish a coherent approach to the use and management of public resources.
  • Detailed policies and procedures are reviewed by the Risk and Compliance Committee and submitted for approval to the Board including AML/CTF and Fraud.
  • Detailed Service Level Agreements (SLA’s) that clearly specify the role and responsibilities when providing services to other Government agencies or departments.
  • Mandatory annual compliance training is undertaken by all employees.
  • Independent internal auditing and reporting to Management and the Board.


Credit and country risk

The framework within which credit and country risk is managed is as follows:

  • The Board approves our Credit Policy. The Credit Policy sets out the framework for the management of credit risk within Export Finance Australia.
  • The Executive Committee reviews large or complex exposures and potential transactions, and provides advice on matters of policy.
  • A delegation framework ensures larger exposures are reviewed by Senior Management, the Board and Government representatives (as appropriate).
  • Given the higher risk nature of the portfolio, intensive client account management is performed throughout the life of an exposure. Systems have been developed to support client account management.
  • Management reporting to the Board includes:
    • a credit report (quarterly)
    • country commentary (at each meeting) and a comprehensive review of all countries (annually)
    • exceptional cases (reported as they arise)
  • Independent internal auditing and reporting to Management and the Board.

Market Risk

The framework within which market risk is managed is as follows:

  • A Treasury Policy and the Credit Policy set out the framework for the management of our market risk.
  • The Board and Government provide parameters within which activity can take place.
  • The Treasury Risk Review Committee meets periodically to review factors affecting the portfolio, discuss upcoming transactions and related issues.
  • A delegation framework ensures involvement of the senior Management and the Board in significant market risk management decisions.
  • Systems support treasury operations within the parameters set by the Board, the Government and the delegation structure.
  • Management reporting includes Treasury reporting quarterly to the Board Audit Committee and regularly to the Board including the reporting of exceptional matters as they arise.
  • Independent internal auditing and reporting to Management and the Board.

Operational and financial risk

The framework within which operational and financial risk is managed is as follows:

  • The full range of operational and financial risks that we must manage has been identified and is updated annually in the context of the Corporation’s corporate planning. The entire senior Management team is involved in the update.
  • Specific policies and procedures and other control responses are in place to deal with each identified risk.
  • Fortnightly Executive team and regular Management meetings facilitate ongoing oversight of key risks.
  • Regular meetings with Government agencies or departments on services provided under a legislative requirement and or through detailed SLA’s.
  • Employees are required to report compliance breaches to their immediate manager, or alternatively to any member of the senior Management team, as they arise. Annually each member of the senior Management team makes a compliance declaration for actions within their area of responsibility and each member of the Executive makes a compliance declaration to the Board Audit Committee.
  • Semi-annual written representation letters in relation to the financial accounts are signed by the Managing Director and Chief Financial Officer and tabled at the Audit Committee and Board.
  • External auditing by the ANAO or their representatives and independent internal auditing and reporting to Management and the Board.


The Risk Management Framework is reviewed and renewed annually.