Risk Management

Risk Management is an independent unit and reports to the CEO. The managing director is Úlfar F. Stefánsson, Chief Risk Officer.

Risk Management is divided into three departments.

Risk Monitoring and Framework is responsible for the internal control framework and supports the first line of defence of risk management. The department is responsible for monitoring credit quality of loans and determining appropriate levels of provisioning and ensures that internal processes and controls minimize the risk of loss as effectively as possible. The unit is also responsible for developing and maintaining tools for identifying, measuring, monitoring and controlling operational risk. Each division of the Bank is responsible for managing its own operational risk.

The Bank’s Risk Officer for Security and Data belongs to Risk Monitoring and Framework and supervises security issues and data management in the Bank’s second line of defence.

Risk Analysis 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 developing the Bank’s credit rating models.

Credit Analysis ensures the involvement of Risk Management in loan cases in the credit divisions and analyzes and monitors loan cases submitted to the Bank’s credit committees. The unit also administers and organizes credit committee meetings, advises on changes to the credit rules and reports to the Board Credit Committee.
The Risk Officer for pension funds managed by Arion Bank is a member of Risk Management and reports to the managing director. The Risk Officer for pension funds performs the duties assigned in the Pension Act No. 129/1997 and Regulation No. 590/2017 on risk management in 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 2020 report.