Risk management

Risk management strategy

KELER's risk management strategy is based on the currently applied business strategy. KELER has built its strategy on conservative and prudent risk management principles. It has also developed its methods, processes and built-in controls, in accordance. Besides the owners and the Board of Directors with management powers, several other committees (i.e. Risk Committee, User Committee) operate in KELER, which are responsible for tracking a specific part of the risks. The Central Bank of Hungary regularly monitors KELER’s operation in its supervisory and its overseer function. KELER is basically a transparent and low-risk profiled infrastructure.

Components of the risk management strategy include:

• risk taking policy:
In the light of the special role it plays, KELER's objective is to make sure that its capital position is both stable and reliable and that its risks are transparent and properly managed at all times.

  • risk appetite (willingness to take risk, ability to take risk):
Risk appetite can be determined by surveying the willingness and the ability to take risk.
In case of KELER there is a barrier to interpreting the risk appetite as the willingness to take risk is almost entirely determined by legislations applicable to KELER. KELER is a central securities depository regulated by CSDR1 , which in addition to core services also provides non-banking and banking type ancillary services, therefore besides the Tpt.2 , the institution is also regulated by the Hpt.3  and CRR4. CSDR defines the core and ancillary activities of KELER and, together with other pieces of legislation, stipulates also prudential requirements.
The capacity to take risks is determined by the values of the own funds, which can be stable or volatile depending on medium term (1-3 years) profitability.

risk structure:

It follows from the above that the creation/development of KELER’s risk structure primarily depends on external circumstances. Most important factors are the regulatory environment (which limits risk taking), restrained internal willingness to take risks and the activities of the securities settlement system which causes fluctuation in KELER’s risk taking (simultaneously with the revenues that serve as funds for capital increase).

• the structure of risk management and its position within the organisation:

The organisational structure and activities of risk management (risk control function) as well as its position within KELER are described in the relevant internal regulations. KELER outsourced risk management tasks to its subsidiary, KELER CCP, but responsibility and decision-making remains at KELER’s CRO within KELER. Daily risk management tasks are performed by KELER CCP separately pursuant to CEO’s statement.
1 Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and amending Directives 98/26/EC and 2014/65/EU (CSDR)
2 Act CXX of 2001 on the Capital Market (Tpt.)
3 Act CCXXXVII of 2013 on Credit Institutions and Financial Enterprises (Hpt.)
4 Regulation (EU) No 575/2013 of the European Parliament and of the Council on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (CRR)