Separate Annual Report 2021

100 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | SEPARATE FINANCIAL STATEMENTS 2022 BARBADOS PUBLIC WORKERS' CO-OPERATIVE CREDIT UNION LIMITED Notes to the Separate Financial Statements For the year ended March 31, 2022 (Expressed in Barbados dollars) 73 23. Financial Risk Management, continued Credit risk, continued Financial investments, continued • Liquidity, management problems or changes in the scope of business or organizational structure (such as the discontinuance of a segment of the business) that results in a significant change in the borrower’s ability to meet its debt obligations (where the opposite is true) • Corporate Credit Rating downgrade or upgrade by CariCRIS or other recognised International Rating Agency The below table provides the Forecast of the Macroeconomic Outlook Scenarios: Incorporation of Forward Looking Information Assessment, Scenarios Expected State Upside Positive Base case Stable Downside Negative The Credit Union assigned probabilities and related weights based on the most likely forecasted economic outlook for the period under assessment. This probability is multiplied by a multiplier factor based on management’s professional judgement to derive the adjustment required to incorporate the forward-looking estimate. Since Barbados received a stable outlook for the period under assessment by Moody’s and the Central Bank of Barbados, the base case scenario was the most likely scenario. Out of the sensitivity analysis of nine forecasted states, a forward-looking adjustment of 4% was applied as at March 31, 2022. Exposure to credit risk before collateral held or other credit enhancements The Credit Union limits its exposure to credit risk by investing only in entities that have high credit ratings and Government of Barbados securities. Government securities are invested over a longer period than term deposits with other financial institutions which typically mature within one year. The Credit Union has invested in FVOCI equity instruments as well, which gives it an opportunity to monitor the performance of these companies over time and make economic decisions where warranted. The Credit Union has documented investment policies in place, which guide the management of credit risk on investments.

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