Risk Management and Complience

OmaSp’s Board of Directors has approved guidelines for the bank regarding the organisation of risk management and independent monitoring functions. The bank has arranged for the following independent functions to ensure efficient and comprehensive risk management and internal monitoring:

  • Risk control function
  • Compliance function
  • Internal audit function
  • Credit risk assessment function

The task of OmaSp’s risk management is to ensure that the bank’s notable risks are identified, assessed and measured and that risks are monitored and managed as part of the daily management of business operations. OmaSp’s risks are assessed on a regular basis and the Board of Directors examines the company’s risk management strategy, risk tolerance and approach to risk taking on a regular basis. Risks are managed by means of risk assessments and measures implemented on the basis of the assessments, with systematic monitoring and analysing the operational environment and the market.

A special segment within the bank’s risk management is credit risk management, and the company has in place a separate credit risk assessment function. The credit risk assessment function ensures that the bank has in place a credit risk strategy and credit risk management principles approved by the Board of Directors. The function monitors and assesses the OmaSp’s credit risk by utilizing the reporting produced for the Board of Directors regarding the structure and quality of the company’s loan portfolio, its sizeable customer liabilities along with special credit risk reports.

In addition to the aforementioned assessment functions, OmaSp has in place a separate compliance function that is responsible for monitoring and ensuring that the bank conducts its operations in compliance with the legislation in force at any given time. The compliance function also monitors and ensures that the bank abides by internal guidelines and procedures. Furthermore, OmaSp has an internal audit function entrusted with verifying the adequacy, functioning and effectiveness of the bank’s internal monitoring. OmaSp’s risk management, credit risk management, compliance and internal audit functions report to the Board of Directors.

Key information on risks that are specific to OmaSp or its industry

The realisation of any of the risk factors described below could have an adverse effect on the OmaSp’s business, operating results and/or financial condition and the value of the Offer Shares. The order in which the risk factors are presented does not reflect the probability of their realisation or their order of importance.

Risks associated with the bank’s operating environment

  • Uncertainty and unfavourable development in the economy and capital markets
  • The development of the Finnish housing and property market may be different in different parts of the country and unfavourable development may have a material adverse effect on the OmaSp’s business 
  • OmaSp is exposed to systemic risk

Risks relating to the bank’s business

  • OmaSp may not necessarily be able to implement its strategy or adjust it to changes in the operating environment, or the chosen or implemented strategy may turn out to be wrong
  • The financial sector is a tightly regulated industry and changes in legislation concerning the company’s industry and developments in case law may be unfavourable to the bank
  • Realisation of risks relating to compliance with regulation, requirements of customers and other stakeholders as well as legal proceedings may have a material adverse effect on the bank’s business
  • OmaSp may fail to comply with requirements relating to the prevention of money laundering and terrorist financing or the procedural requirements relating to the provision of banking and investment services
  • Changes in the number of customers, the demand for services and the pricing of the services may decrease OmaSp’s interest income, fee and commission income, and net gains on investments
  • OmaSp may not necessarily be able to respond to tighter competition, develop its services or solutions in line with competitors, or digital development may force the bank to make additional investments
  • Failure to recruit skilled management or personnel or loss of key employees may affect the bank’s ability to pursue its business or to grow
  • Realisation of risks relating to possible corporate acquisitions may have an adverse effect on the bank
  • Operational risks and disruptions in the bank’s business may have a material adverse effect on the bank
  • OmaSp’s operating conditions are dependent on the uninterrupted functioning of IT systems and reporting and monitoring systems and the renewal of IT systems may cause considerable costs to the bank
  • The use of cooperation partners involves risks, such as action harmful to the company on the part of such partners or uncertainties involved in cooperation agreements
  • OmaSp’s insurance coverage may not necessarily cover all risks relating to the its business
  • The interpretation, implementation and continuity of customer contracts involve risks
  • OmaSp may fail in the identification of information security and cybersecurity risks, control and management of resourcing of risks and in compliance with regulation
  • OmaSp may fail in the effective internal control of financial reporting and be exposed to the risk of its financial reporting being inaccurate or misleading
  • Failure to protect intellectual property rights may have a material adverse effect on OmaSp and any intellectual property right infringement actions brought against the bank may cause the company to incur costs and damage its business
  • The reputation of the bank may be damaged, which may have an unfavourable effect on the bank’s customer acquisition and its ability to recruit and retain key employees
  • Strikes and other industrial action may have an adverse effect on the bank’s business

Risks relating to financial condition and financing

  • Changes in the bank’s liquidity and availability of financing may have an adverse effect on OmaSp
  • Solvency regulations applicable to the bank may be tightened and changes or decisions from the authorities concerning the solvency may have an adverse effect on OmaSp
  • Realisation of interest rate risk may have an adverse effect on the bank
  • Realisation of credit risks may have an adverse effect on the bank
  • Realisation of market risks may have an adverse effect on the bank
  • Changes in the fair values of investments may have a considerable effect on the bank’s results and OmaSp may be unsuccessful in its investing activities
  • If OmaSp becomes subject to resolution, this may lead to the cancellation of shareholders’ shares in part or in full
  • Impairment of goodwill may have an adverse effect on the bank
  • The implementation of IFRS 9 “Financial Instruments” and IFRS 16 “Leases” standards as well as upcoming changes in financial reporting standards expose the bank to risks relating to adjustments of accounting policies and financial statements, which could have an effect on the figures reported by OmaSp
  • Realisation of tax risks may result in financial losses that may have an unfavourable effect on the bank’s business