Non-Consolidated Annual Report 2014

BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED

NON-CONSOLIDATED ANNUAL REPORT 2014

BARBADOS PUBLIC WORKERS' CO-OPERATIVE CREDIT UNION LIMITED

Notes to the Non-consolidated Financial Statements

For the year ended March 31, 2014

(Expressed in Barbados dollars)

23. Financial Risk Management…(continued)

Market risk…(continued)

Interest rate risk

…(continued)

An interest rate sensitivity analysis was performed to determine the impact on profit of reasonable

possible changes in the interest rates prevailing as at March 31, 2014, with all other variables held

constant.

The impact is illustrated and shown in the table below:

2014

2013

Increase / decrease of 100 bps

Impact on profit + 100 bps

3,343,618

3,022,227

Impact on profit – 100 bps

(3,343,618)

(3,022,227)

Operational risk

Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated

with the Credit Union’s processes, personnel, technology and infrastructure, and from external factors

other than credit, market and liquidity risks such as those arising from legal and regulatory

requirements and generally accepted standards of corporate behaviour.

While operational risk is inherent to each of the Credit Union's business activities, the exposure is

minimised by ensuring that the appropriate infrastructure, controls, systems and human resources are

in place. Key policies and procedures used in managing operating risk involve a strong internal audit

function, segregation of duties, delegation of authority, and financial and managerial reporting.

Within the Credit Union, mitigation of operating risk is assigned to senior management supported by a

well-defined organisational structure that segregates operational and administrative functions. Back-

up capabilities are also maintained to ensure on-going service delivery in adverse circumstances.

In addition, periodic reviews are undertaken by the Internal Audit department. The results of the

reviews are discussed with the management of the business unit to which they relate, senior

management and Board of Directors.