About risk managment

"Premium Bank" ASC (hereinafter referred to as the Bank) in its current operations follows the requirements and recommendations of regulatory bodies and international organizations, applies best practices, as well as methods and models for identifying and assessing risks. Based on the requirements and recommendations of regulatory bodies, the Bank periodically reviews its risk management strategy and policies, as well as internal rules.

Depending on the nature of operations, the Bank manages credit, market, operational, liquidity, strategic, and project risks. It identifies significant risks and determines the risk appetite for these types of risks. In line with the risk management strategy, the Bank adopts flexible measures. According to the risk management policy, the Bank defines structures for defense lines and sets responsibilities for managing risks within each structure.

The risk management system is governed by the following principles:

• Principle of Complexity — identifying risk factors and risk objects, determining risk appetite based on a comprehensive analysis of all business processes (products), both existing and planned, and the application of standard working procedures and elements of the risk management system, adherence to the unity principles of methodological approaches in solving issues related to risk assessment and management. The risk assessment and management procedures must be closely linked with the risk management system of non-core operations of the Bank;

• Principle of Continuity — regular monitoring of the main parameters of the risk management system, reviewing and defining the parameters, including limits and other restrictions for the clearing participants' operations, analysis of the risk management system's functioning, conducting stress tests, and preparing reports for assessing current risks;

• Principle of Transparency — the Bank provides interested parties with necessary information about the risk management system, familiarizing them with methodological documents, including risk assessment approaches, as well as the main aspects of monitoring the financial sustainability of the Bank's customers and counterparties. The results of internal ratings and limits of customers and counterparties, as well as other restrictions, are not disclosed;

• Principle of Independence of Assessments — risk assessment and analysis are conducted by separate structural units, independent from the units responsible for taking on risks. This prevents potential conflicts of interest during risk evaluation. To ensure the independence and objectivity of assessments, reasonable limitations are placed on direct contacts between the units responsible for risk evaluation and customers (counterparties);

• Principle of Conservatism — in risk assessment, the Bank follows a conservative approach, ensuring a reasonable match between the risk level and the expected return. The principle of conservatism means that if it is impossible to unambiguously interpret the effect of risk factors on risk objects, the Bank will take action based on the worst-case scenarios;

• Principle of Availability — when applying various elements of the risk management system, the Bank takes into account the costs related to analyzing, controlling, and managing risks, as well as the organization and implementation of products, services, and services that carry risks.

Tasks of the Risk Management System:

• Define procedures for identifying risks inherent to the Bank’s operations, as well as potential risks the Bank may be exposed to;

• Define indicators of significant risks for the Bank;

• Define methods and procedures for managing significant risks for the Bank;

• Highlight the most significant risks for the Bank;

• Summarize the quantitative assessments of significant risks to determine the total amount of accepted risks;

• Define the target capital level and current capital needs for each risk group;

• Define methods to minimize the level of accepted and potential risks;

• Develop a monitoring and reporting system within the RIED framework for the Bank;

• Define internal control procedures for meeting the risk management requirements.