Financial instruments are contractual obligations to receive or deliver cash and cash equivalents. In accordance with IAS 32 and IAS 39, these include both primary and derivative financial instruments. Primary financial instruments include in particular bank balances, all receivables, liabilities, securities, loans and accrued interest. Examples of derivatives include options, swaps, and futures.
The Deutsche Postbank Group accounts for most of the financial instruments in the Group. The risks and derivatives of the Deutsche Postbank Group’s financial instruments are therefore presented separately below.
Taking risks in order to generate earnings is the core function of the Deutsche Postbank Group’s business activities. One of the Deutsche Postbank Group’s core competencies is to assume normal banking risks within a strictly defined framework, whilst at the same time maximising the potential return arising from them. In the process, each of the relevant risks is carefully identified, continuously measured and monitored as well as regularly reported. To this end, the Deutsche Postbank Group has established a risk management organisation as the basis for risk and earnings-based overall bank management.
In accordance with the requirements of MaRisk (Minimum Requirements for Risk Management), the risk strategy is consistent with the business strategy and takes into account all significant business areas and types of risk. In addition to an overarching, groupwide risk strategy, Deutsche Postbank AG’s Management Board has resolved specific risk strategies for market, credit, liquidity and operational risk.
Operational responsibility for risk management is spread across several units in the Deutsche Postbank Group, primarily the Financial Markets Board Department, domestic/foreign credit management and the credit functions of the retail banking business and, at a decentralised level, the subsidiaries BHW Bausparkasse AG, BHW Bank AG, Deutsche Postbank International S. A. and PB Capital Corp., as well as the London branch.
Risk Controlling, which is part of the Finance Board Department, is the independent, group-wide risk monitoring unit. Risk Controlling is authorised to make decisions regarding the methods and models applied in risk identification, measurement and limitation. Risk Controlling, together with the risk control units at BHW Bausparkasse AG, BHW Bank AG, Deutsche Postbank International S. A., PB Capital Corp. subsidiaries and the London branch, is responsible for operational risk control and reporting at Group level.
The Internal Audit unit is a key element of the Deutsche Postbank Group’s business and process-independent monitoring system. In terms of the Postbank’s organisational structure, it is assigned to the chairman of the Management Board and reports independently to the whole Management Board. The Postbank Group Management Board is responsible for risk strategy, the appropriate organisation of risk management, monitoring the risk content of all transactions and risk control. In conjunction with the Risk Committees, the Deutsche Postbank Management Board has defined the underlying strategies for activities on the financial markets and the other business sectors of the Group.
The Deutsche Postbank Group distinguishes between the following risk types: