Consolidated Annual Report 2021

89 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2021 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED Notes to the Consolidated Financial Statements For the year ended March 31, 2021 (Expressed in Barbados dollars) 63 25. Financial Risk Management 25.1 Introduction Risk is inherent in the Group’s activities but is managed through a process of on-going identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Group’s continuing profitability and each individual is accountable for the risk exposures relating to his or her responsibilities. The Group is exposed to credit risk, liquidity risk, market risk and operational risk. The Group’s aim therefore is to achieve an appropriate balance between risk and return and minimise potential adverse effects on its financial performance. The independent risk control process does not include business risks such as changes in the environment, technology and industry. The Group's policy is to monitor those business risks through its strategic planning process. Risk management structure The Board of Directors is responsible for the overall risk management approach and for approving the risk management strategies and principles. Supervisory and Audit Committees have the responsibility to monitor the overall risk process within the Group. The Group’s policy is that risk management processes are audited annually by the Internal Audit function, which examines both the adequacy of the processes and the Group’s compliance with the processes. Internal Audit discusses the results of all assessments with management, and reports its findings and recommendations to the Supervisory and Finance Committees. Risk mitigation As part of its overall risk management, the Group invests a portion of its available funds in lending, financial investments and non-earning assets. The Group’s main source of income is derived from lending and it seeks to actively use collateral to reduce its credit risk. The Group also has sought long term funding requirements to match their long-term loan position. In order to avoid excessive concentrations of risk, the Group’s policies and procedures include specific guidelines to focus on maintaining a diversified portfolio.