The SBCI aims to manage risk in an informed and proactive manner, in accordance with its Risk Management Framework and Risk Appetite Statement, such that the level of risk is consistent with the underlying business activity and that the SBCI understands and is able to manage or absorb the impact of a risk in the event that it materialises.

Roles and responsibilities

The Board is responsible for setting the risk appetite and overseeing and guiding risk management activity across the SBCI. The Audit and Risk Committee is responsible for overseeing the implementation of the SBCI Risk Management Framework and ensuring that the SBCI’s risk management governance model provides appropriate levels of independence and challenge. The Audit and Risk Committee reports to the Board.

Three Lines of Defence

The SBCI’s Risk Management Framework is predicated on the three-lines-of-defence model. Within this model, staff and management (the first line) incur and own the risks, while the SBCI risk function and other control functions (the second line) provide independent oversight and objective challenge to the first line of defence, as well as monitoring and control of risk. The Internal Audit function (the third line) provides independent, reasonable, risk-based assurance to key stakeholders on the robustness of the SBCI risk management system, governance and the design and operating effectiveness of the internal control environment.

Audit

In accordance with statutory requirements, the SBCI is audited by the Comptroller and Auditor General. The SBCI’s internal audit function is managed by the NTMA Head of Internal Audit and includes an external firm, currently KPMG, appointed to carry out internal audit work reporting to the Head of Internal Audit.

Principal Risks and Uncertainties

The principle risks and uncertainties facing the Company are detailed below. These risks reflect the current early stage of the SBCI’s development.

Strategic Risk

The SBCI relies on its product and on-lender strategy to meet its objectives in providing finance to SMEs. Should it fail to structure its products appropriately and deploy an appropriate strategy for delivering these, there is a risk that on-lenders will not participate as envisaged and SMEs will not purchase the offered products.

Credit Risk

The SBCI is exposed to the risk that a borrowing counterparty defaults on its obligations and fails to repay its debt in full, resulting in losses to the SBCI.

Operational Risk

The SBCI is exposed to a broad range of operational risks arising from the people, systems and processes involved in meeting its objectives. Key operational risks include systems failures, process errors, over reliance on key individuals, failure to follow procedures, reporting errors etc. which could ultimately result in the SBCI failing to meet its objectives and significant reputational damage.

Resourcing Risk

The SBCI is a small organisation that relies on skilled specialist professionals to meet its statutory objectives. There is a risk that the SBCI is not adequately resourced with the appropriate experience and expertise, resulting in failure to achieve its objectives.