Risk Management

The BMG Prudential Conglomerate believes risk management is essential for maximizing capital use efficiency and for choosing business opportunities, as well as ensuring the preservation of process integrity and independence. To this end, based on best risk management practices, Banco BMG has developed policies, systems and internal controls to mitigate and control possible losses arising from exposure to the risks to which its activities are exposed. These include a set of processes and routines suited to its operational methods.
In this context, Consolidated Prudential BMG manages its risks – capital, credit, liquidity, operational and market – with specific actions for each one, described below:

Capital Management – The Capital Management policy describes mechanisms and procedures designed to maintain capital compatible with the risks incurred by the institution and with regulatory capital requirements, as defined by the relevant local legislation published by the Central Bank of Brazil, in order to preserve profitability, solvency and, consequently, the continuity and growth capacity of its businesses.

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Credit risk – The credit risk policies of Consolidated Prudential BMG seek to ensure that exposures to Credit Risk are consistent with the risk appetite declared by Management. For this, it defines criteria for monitoring credit performance; projections of losses, so as to ensure adequate pricing of financial instruments; performance of stress tests and adequacy of concession policies, when opportunities and/or need are identified.

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Liquidity Risk – The liquidity risk management policy aims to ensure that the achievement of the Bank’s strategies and objectives is continuously evaluated in order to mitigate possible time mismatches, allowing corrective actions to be taken when necessary. Hence, it establishes minimum cash parameters to be observed and maintained, as well as the tools necessary for its management in normal or crisis scenarios.

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Market Risk – Regarding market risk, the Prudential BMG Conglomerate seeks to employ a conservative policy to effectively supervise and control each factor so that it can identify and quantify the volatilities and correlations that may impact the price of the asset. For this purpose, management uses practices and technologies for the measurement and monitoring of previously defined limits, sensitivities and oscillations in foreign exchange exposure, interest rates, stock and commodity prices, including the risks inherent in new activities and products, adjusting the necessary controls and procedures.

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To access the Mark-to-Market Manual, click here.

Operational Risk – Operational Risk Management is the process of identification, evaluation, measurement, control and mitigation, monitoring, prevention and reporting of all situations that represent risks to the Consolidated Prudential BMG organization. Therefore, the Operational Risk Policy aims to establish guidelines to establish an effective risk management environment for its processes, products and services, in order to ensure compliance with established governance and control standards are in accordance with Senior Management’s guidelines.

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Risk Management Report

Risk Management Report