In the course of its normal business, Triodos Bank runs operational risks. These risks relate to losses Triodos Bank could incur as a result of inadequate or failing internal processes, systems, human behaviour or external events. Triodos Bank tries to limit these risks as much as possible by making sure there are clear policies, reports and procedures in place for all business processes. Numerous control measures are embedded in IT-systems and recorded in monitoring procedures and work instructions. Training, level of experience and involvement of the co-workers all support this, because people are key in the success of a risk management process.
The operational risk framework uses several tools and technologies to identify, measure, mitigate and monitor risks on an operational, tactical and strategic level.
This process takes into account our duty of care to clients, and Triodos Bank’s substantial objective, such as screening for environmental criteria.
A special part of Operational Risk Management is Information Security and Business Continuity. Activities to manage risks related to these subjects are executed under the responsibility of the Chief Operating Officer. Local Operational Risk Managers have a functional reporting line to Group Operational Risk Management to ensure the overall operational risk profile of the organisation.
The Basic Indicator Approach is used for the capital calculation of operational risk, in accordance with Basel II. The operational risk framework is in line with the principles mentioned in the Sound Practices for the Management and Supervision of Operational Risk. These sound practices give guidelines to the qualitative implementation of operational risk management and are advised by the Bank of International Settlements.