AXIS BANK

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In the following part of the report, we’ll be discussing about different techniques of Risk
Management used by Axis Bank

Risk Management of AXIS Bank

The main objective of AXIS bank is to ensure that there is an appropriate balance between risks
and return, also they have implemented comprehensive policies and procedures for identifying,
monitoring and managing risk throughout the bank. Their Risk-management involves
understanding of different types of risks, risk assessment, and continuous monitoring.

During fiscal 2020-21 year they started implementing measures to improve the risk management
framework.

Objectives and policies of AXIS bank

Their risk management processes are guided by different risk management policies, independent
risk oversight, and periodic monitoring through sub-committees of the Board of Directors.

AXIS bank has various Senior Management committees such as:

● The Asset Liability Management Committee (ALCO)

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And so, risks are managed within the broad policy framework to ensure the safety of all
stakeholders.

They have put in place a reputation risk management framework and policies to manage credit-
risk, market-risk, operational-risk, information security-risk, subsidiary risk and asset-liability-
risk for domestic and overseas operations. These policies are drawn based on the risk perceptions
of these economies and our risk appetite.

A Stress-Testing Policy has also been formulated by AXIS-Bank to measure the impact of
adverse stress scenarios on capital adequacy.

RMC, The Risk Management Committee of the Board is responsible for approving all the risk
policies.

Structure for Risk Management

CRO, the Chief Risk Officer reports to the Managing Director and CEO and the RMC (The Risk
Management Committee).

This department has different teams for Pandemic Risk, Credit Risk, Market Risk (including
Treasury Mid Office), Enterprise Risk, Operational Risk, Risk Analytics, Risk Data Management
and Information Security Risk. These teams report to the Chief Risk Officer.

Axis Bank follows a comprehensive risk management framework that encompasses all aspects of
its operations. The bank has put in place a structured risk management framework to identify,
measure, monitor, and manage risks that may arise from its operations. The following are the key
components of Axis Bank's risk management framework:

 Risk Management Policies: Axis Bank has well-defined risk management policies that
are reviewed periodically and updated as necessary. The policies cover different types of
risks that the bank may be exposed to, including credit risk, market risk, operational risk,
liquidity risk, and reputation risk.
 Risk Appetite Framework: Axis Bank has established a risk appetite framework that
outlines the level of risk that the bank is willing to accept in pursuit of its business
objectives. The framework is reviewed and updated annually or more frequently as
required.

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  Risk Identification: Axis Bank has established processes to identify and assess various
risks that the bank may be exposed to. The process involves identifying risks at various
levels of the organization, including business units, functions, and processes.
 Risk Assessment: Axis Bank conducts a comprehensive assessment of the identified
risks to determine their potential impact on the bank's business objectives. The
assessment includes evaluating the likelihood of the risk occurring and the potential
impact on the bank's financial performance, reputation, and other areas.
 Risk Mitigation: Based on the risk assessment, Axis Bank develops and implements risk
mitigation strategies to manage the identified risks. The bank has established risk limits,
controls, and procedures to manage the various risks it faces.
 Risk Monitoring and Reporting: Axis Bank has established a system to monitor and
report on the effectiveness of its risk management framework. The bank regularly
monitors its risk profile and reports the results to the board and senior management.

Overall, Axis Bank's risk management framework is designed to ensure that the bank identifies,
assesses, and manages risks effectively to achieve its business objectives while safeguarding the
interests of its stakeholders.

Some common measures of Risk Management

There are several common measures of risk management that organizations use to identify,
assess, and manage risks effectively. Here are some examples:

 Risk Assessment: This involves identifying, evaluating, and prioritizing risks that an
organization may face. It includes determining the likelihood of the risk occurring and the
potential impact on the organization.
 Risk Mitigation: This involves developing and implementing strategies to manage
identified risks. It includes establishing controls, procedures, and risk management plans
to reduce the likelihood or impact of the risk.
 Risk Transfer: This involves transferring the risk to another party through insurance or
other contractual arrangements.
 Risk Avoidance: This involves avoiding activities or situations that may lead to potential
risks.
 Risk Retention: This involves accepting the potential risk and bearing the financial
consequences if it occurs.

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  Business Continuity Planning: This involves developing a plan to ensure that critical
business functions can continue in the event of a disruption, such as a natural disaster or
cyber-attack.
 Compliance Management: This involves ensuring that an organization complies with
laws and regulations related to risk management, such as data privacy laws, health and
safety regulations, and financial reporting requirements.

Overall, a comprehensive risk management strategy should include a combination of these

MAJOR Measures of Risk Management that Axis-Bank follows

 The main focus is on portfolio diversification to reduce concentration risks which

References:

1 - https://www.axisbank.com/annual-reports/2020-2021/risk-management.html