Separate Annual Report 2021

79 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | SEPARATE FINANCIAL STATEMENTS 2021 BARBADOS PUBLIC WORKERS' CO-OPERATIVE CREDIT UNION LIMITED Notes to the Separate Financial Statements For the year ended March 31, 2021 (Expressed in Barbados dollars) 57 23. Financial Risk Management, continued Introduction, continued Risk management structure The Board of Directors (“the Board”) is responsible for the overall risk management approach and for approving the risk management strategies and principles. The Supervisory Committee has the responsibility to monitor the overall risk process within the Credit Union. The Credit Union’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 Credit Union’s compliance with the processes. Internal Audit discusses the results of all assessments with management, and reports its findings and recommendations to the Supervisory Committee. Risk mitigation As part of its overall risk management, the Credit Union invests a portion of its available funds in lending, financial investments and non-earning assets. The Credit Union’s main source of income is derived from lending and it seeks to actively use collateral to reduce its credit risk. The Credit Union also has sought long term funding requirements to match its long term loan positions. In order to avoid excessive concentrations of risk, the Credit Union’s policies and procedures include specific guidelines to focus on maintaining a diversified portfolio. Impact of COVID-19 COVID-19 On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic. Governments and regulatory bodies in affected areas, including Barbados, have imposed a number of measures designed to contain the outbreak, including government-mandated social distancing measures, travel restrictions, quarantines, and stay at home directives. The breadth and depth of the impact of COVID-19 on the global economy and financial markets continues to evolve with disruptive effects. The specific impact on the economy of Barbados, which is largely driven by tourism has been significant and during the year reduced incoming flights to Barbados continued. The resulting impacts continued into 2021 including increased unemployment, hotel closures/hotel operations at reduced occupancy levels for those which remained opened and reduced revenue for businesses, financial institutions and the Government. As a consequence of the job cuts and reduced disposable income, there was a continued impact on persons’ ability to service their loan commitments and other obligations. While some of the Government and regulatory measures have been eased across regions and the economy has started to recover, subsequent spikes in the virus have caused some measures to be reinstated and future economic activity to be uncertain. This has also been the case in Barbados, and the Government continues to monitor the number of active cases.