22. The SWF should have a framework that identifies, assesses, and manages the risks of its operations.
22.1. The risk management framework should include reliable information and timely reporting systems, which should enable the adequate monitoring and management of relevant risks within acceptable parameters and levels, control and incentive mechanisms, codes of conduct, business continuity planning, and an independent audit function.
22.2. The general approach to the SWF’s risk management framework should be publicly disclosed.
For domestic financial facilities, fund allocation is based on the risk of the Banks, i.e. the agent banks stand accountable for the risks and guarantee full repayment of NDFI financial facilities. NDFI does not take any direct risk in extending loans to the domestic recipients. Regarding cross-border investments, the IPS has set the framework for identification, assessment, and management of risks.
Risk management is consistent with the risk profile of asset classes. NDFI, in line with asset managers, monitors and reviews risk exposure in a timely manner to ensure compliance with the IPS.
For domestic facilities, the risk exposure has been defined in AoA. That is, the agent banks take the risk, not NDFI.
For investments abroad, the IPS defines in detail the acceptable risk exposure. The IPS will be disclosed once approved by the Board of Trustees.