Committee of Early Detection of Risk
|Ali Murat Memioğlu||Chairman (Independent Board Member)|
DUTIES AND WORKING PRINCIPLES OF THE RISK MANAGEMENT COMMITTEE
It has been decided to form the Risk Management Committee in accordance with the Turkish Commercial Code and Communiqué on Corporate Governance Principles of the Capital Markets Board.
The functions pertaining to Risk management, which used to be carried out by the Corporate Governance Committee, will be carried out by a separate committee according to the decision taken at the Board of Directors meeting held on March 12, 2013.
The purpose of the Risk Management Committee, which will act under the Board of Directors, is to monitor possible risk exposures and to develop the necessary policies to carry out the risk management processes.
This document has been prepared pursuant to the regulations, provisions and principles involved in the Turkish Commercial Code, the Capital Markets Legislation, and the Articles of Association, as well as the Corporate Governance Principles of the Capital Markets Board.
3. AUTHORITY AND SCOPE
Risk Management is a systematic process formed in order to define the strategic, operational, external environmental, and financial risks that may affect the activities of the Company, to manage these risks in accordance with the risk-taking profile of the Company, and to provide a reasonable assurance regarding the achievement of the Company’s objectives. This process, being applied to the entire Company, is used by the Board of Directors, senior management and all other employees in the determination of the strategies.
The Committee acts within the bounds of its authority and responsibility, and makes recommendations to the Board of Directors. The responsibility of the final decision always rests with the Board of Directors.
3.1. To constitute efficient internal control systems in order to define, evaluate, monitor and manage the risk factors that may have an affect on the achievement of the Company’s objectives, according to the impact and case,
3.2. To integrate the risk management and internal control systems with the institutional structure of the Company and monitor their efficiency,
3.3. To conduct studies on measurement and reporting of the risk factors by means of the risk management and internal control systems of the Company with appropriate controls, and to use them in the decision-making mechanisms,
3.4. The determination and review of the risk management policies, approach and standards among the Company,
3.5. To take and apply any kind of necessary decision regarding the appropriate action to take on the detected risks.
4. THE STRUCTURE OF THE COMMITTEE
4.1. The Risk Management Committee is composed of at least two members of the Board of Directors. If the Committee consists of only 2 members, both of them shall hold non-executive positions. If there are more than two members in a committee, the majority of its members have to be from among the non-executive members of the Board of Directors, who do not serve as the General Manager or a member of the Executive Committee.
4.2. The Risk Management Committee members select a chairman amongst themselves. The Chairman of the Committee should be elected from among the independent members of the Board of Directors.
4.3. The Board of Directors appoints the Risk Management Committee Members at the first Board meeting following the General Assembly Meeting in which the Board of Directors is elected.
4.4. The Risk Management Committee serves until the next election of the Board of Directors.
4.5. Termination of the membership of any Risk Management Committee member is at the discretion of the Board of Directors.
4.6. The Board of Directors appoints a new member to complete the term of office upon termination of the Committee membership, resignation, or demise of any committee member.
5. DUTIES AND RESPONSIBILITIES
5.1. To work on early determination of risks that will endanger the existence, growth, or sustenance of the Company, and to work on the application of due measures regarding the strategic, operational, financial, legal and all other kinds of risks and operations, with the aim of managing the risk.
5.2. To gather as often as is necessary for the efficiency of operations.
5.3. To evaluate the situation, identify the dangers, if any, and solutions in the report, which will be submitted for the attention of the Board of Directors every two months. The Committee also sends report to the auditor.
5.4. To invite the appropriate directors to their meetings and obtain their opinions.
5.5. To prepare and present to the Board of Directors an annual assessment report, which shall be included in the annual reports, for working principles including its members, frequency of the sessions and executed activities, in order to provide a basis for the Board’s evaluations of its effectiveness.
5.6. To create internal control systems including risk management systems and processes of information that will minimise the effects of risks that might affect the stakeholders, particularly the shareholders of the company, and present its opinion to the Board of Directors.
5.7. To participate in the design, selection, application and pre-approval processes of the risk measurement model, which is a fundamental instrument during the risk management process, revise the models regularly and implement the scenario analyses, and make the necessary changes,
5.8. To obtain information, opinion and report from the related departments, when necessary, in order to effectively fulfil the risk follow-up functions.
5.9. To monitor and evaluate the efficiency and the results of the risk management activities among the Company,
5.10. To regularly follow the critical risks and all developments related with these risks,
5.11. To measure and report the risk factors by means of the risk management and internal control systems of the Company with the appropriate controls, and to use them in the decision-making mechanisms.
5.12. The Committee scrutinises the risk management systems at least once a year.
The Committee has an annual budget approved by the Board of Directors to ensure that it can carry out its activities efficiently and productively.
7. OPERATIONAL EFFECT
The duties and the working principles of the committee, and the amendments herein, come into effect upon the resolution of the Board of Directors.