Risk Management

Risk Management is an independent unit and reports to the CEO. The division is managed by Gísli S. Óttarsson, Chief Risk Officer.

Risk Management is divided into three departments.

Credit Control is responsible for monitoring credit quality of loans and determining appropriate levels of provisioning. Credit Control also monitors the portfolio credit risk such as single name and industry-sector concentrations and furthermore monitors financial relationships of obligors and the large exposures to financially related obligors.

Balance Sheet Risk is responsible for market risk, liquidity risk, capital adequacy, modelling and stress testing. The department analyzes and monitors risks resulting from balance sheet mismatches and trading activities. It also carries out the Bank’s Internal Capital Adequacy Assessment Process (ICAAP) and Internal Liquidity Adequacy Assessment Process (ILAAP). The department is responsible for the development of the Bank’s credit rating models.

Operational Risk is a part of the Bank's second line of defence and provides support to the first line of defence in managing risk associated with the Bank's day-to-day operations. The department supports the Bank’s measures on internal control and is responsible for implementing risk control self-assessments, listing loss events and supervising work procedures.

The Bank’s Data Officer belongs to Risk Management and his role is to organize and implement improvements in data management and data governance for the Bank as a whole.

The Risk Officer for pension funds managed by Arion Bank is a member of Risk Management and reports to the CRO. The Risk Officer for pension funds performs the duties assigned in the Pension Act 129/1997 and regulation 590/2017 on risk management in pension funds. By positioning the Risk Officer in the Bank‘s Risk Management division the Bank aims to secure independence from the business units managing the pension funds.

Further information on the Bank’s risk management is provided in the section on Risk Management and in the Pillar 3 Risk Disclosures 2018 report.