Understanding and responding proactively to risk and opportunities enables the Bank to safeguard its financial stability and resilience.
The Bank has a comprehensive process to identify and monitor risks and respond appropriately. The Bank continuously reviews and enhances the methods for identification and assessment of risks, sets appropriate metrics and controls, and mitigants for managing significant risks.
In fiscal 2025, the Bank continued to monitor the risks it is exposed to, including economic, credit, market, liquidity and operational risks. Apart from these traditional risks, the Bank is also cognisant of emerging new-age risks due to climate change. The Bank has initiated steps to embed climate risk assessment and climate risk management as part of the Bank’s risk management framework.
The Bank has formulated a Climate Risk Management Framework (CRMF) for integration of climate risk into overall risk management framework and it guides on identifying and assessing the impact of both physical and transitional risks on the lending portfolio. The framework will undergo periodic reviews to ensure alignment with available regulatory climate risk guidance, reflecting the evolving understanding and assessment of climate risk. The Bank has also been participating in policymaking by providing inputs and supporting the regulator in assessing impact of climate change risks on specific sectors.
| Risk Type | Key Risks | Our Response |
|---|---|---|
|
Economic Risk
|
Volatile economic environment driven by changing global monetary policy stance, uncertain global trade environment driven by US tariffs and geopolitical tensions. | Continuous monitoring developments in the global and Indian economy including country risk, sector-specific risks and responding accordingly. Periodic reviews at Risk and Credit Committees. |
|
Credit Risk
|
Uncertainties pertaining to elevated geopolitical risks, uncertain global trade environment driven by US tariffs, continuing high interest rates for longer periods though with changing monetary policy stance and weak global growth outlook across the world posed challenges for customers. | Ensuring effective risk management across business segments, close monitoring of the portfolios for early identification of assets under watch, strengthening by ongoing reviews and stress testing; maintaining healthy capital and liquidity positions, which are well above regulatory requirements. |
|
Market and Liquidity Risk
|
Risks posed by changing monetary policy stance, tighter liquidity conditions for a substantial portion of the year and exchange rate movements. | Comprehensive policies and periodic reviews at the level of Board and committees; strategic priority towards asset liability management and strengthening the Bank’s liability franchise. |
|
Operational Risk
|
A disruption on account of information technology failures, internal/external frauds, execution/delivery process errors, model errors or third-party dependencies. | Effective risk management policies in the area of operational risk, information technology risk, third-party dependencies, model risk along with regular review and reporting/analysis of loss incidents. The Bank continues to focus on simplifying processes and platforms to minimise operational risk. The Bank is also working on rationalisation of product variants to simplify the customer offerings and to ensure efficient delivery mechanism. |
|
Cyber Risk
|
Growing threat of cyberattacks combined with increasing digitisation of banking products and services could expose the Bank to security risks. The Bank also leverages partnerships with third parties and these could also be a source for information security risks. | The Bank continues to strengthen its cyber defences, conduct regular risk assessments, and maintain proactive oversight to ensure resilience across internal systems and external partnerships. The Bank has laid emphasis on data privacy and data loss prevention mechanisms. |
|
Technology Risk
|
The growing customer dependence on digital transactions and the rising volumes of such transactions requires banks to focus on the resilience, availability, scalability and security of our systems. Misalignment between business and IT strategies is a risk. | The Bank is proactively investing in technology and improving its response to changing technological dynamics. The cross-functional co-ordination and Board-level oversight ensures that information technology strategy is aligned with the business strategy with appropriate policies and control frameworks. The Bank has been investing in observability platforms which are critical towards ensuring preventive and proactive responses across application and infrastructure landscape. The Bank’s IT systems were stable and largely uninterrupted during fiscal 2025. |
|
Employee Risk
|
Retention of employees and ability to attract and motivate talented professionals is critical for the successful implementation of the Bank’s strategy and competing effectively. | Provide opportunity for job rotation and enhance career growth and development; employee well-being and upskilling are key priorities along with continuous reiteration of expected standards of conduct. |
|
Compliance Risk
|
As a domestic systemically important bank (D-SIB), compliance with regulations and preparedness to evolving regulatory landscape is a key priority for the Bank. | The Bank has established well-articulated policies and controls to ensure compliance with laws and regulations. Continuous evaluation and updating the policies and processes is done to remain relevant and compliant. An enhanced compliance culture driven by the Bank’s leadership is enabling timely action. |
