Risk

Possible Causes

Potential Consequences

Key risk indicators

Type of indicator

1

Insufficient unbundling of tasks between approval, execution and recording of investment accounts

- Absence of formalized procedure

- Realization of unauthorized investments

-The number of anomalies detected by internal controllers, internal or external auditors, etc.

Manual

- Absence of strict instructions for tasks separation

- Misappropriation of funds

2

Sub- optimized cash management: Surplus not invested, insufficient liquidity

- Bad decision-making related to cash management

- Shortfall in terms of investment returns

- Theoretical return of assets not invested

Automatic

- Absence of investment opportunities

- Liquidity exceedance ratio.

Automatic

3

Inaccurate asset valuation

- Wrong asset prices entry

- Money gains or losses in function of the sense of errors

-The number of anomalies detected by internal controllers, internal or external auditors, market authority, etc.

Manual

- Manipulation of unlisted asset’s valuation

- Over or under valuation of unrealized gains or losses

4

Issuer risk: Overexposure to a given issuer

Human error in:

- Overtaking proportions by one issuer leading to risky exposure

Issuer ratio

Automatic

- Calculation of proportions to allocate to each issuer

- Assessment of issuers

- Excess of the regulatory allowed level

5

Noncompliance with the pre-established investment policy

- Human error

Shortfall in terms of

investment returns

Yield spread between strategic portfolio and existing one

Automatic

- Absence of investment opportunities

6

Unfunded asset's depreciation

- Human error

Incorrect financial data produced

-The number of anomalies detected by internal controllers, internal or external auditors, market authority, etc.

Manual

- Inadequate analysis of the financial situation of a held asset

7

Exceedance of the borrowing limit

- Human error

Excess of the regulatory allowed level

Borrowing ratio

Automatic

- Financing the overinvestment