Risk Management

The Board of Directors of the Bank has overall responsibility for establishing the Bank’s approach to risk and ensuring that an effective risk management framework is in place. The Board approves and periodically reviews the risk management policies and strategies of the Bank.

The Risk Management Department plays a critical role in the Bank’s decision making process. It is managed through a Management Investment Committee (“MIC”) and the Asset Liability Management Committee (“ALMC”). The MIC also acts as the Bank’s Risk Management Committee. Both committees comprise of senior management drawn from key areas of the Bank in implementing risk strategy and policies, monitoring and managing the key risks to which the Bank is exposed. The Bank is exposed to Investment risk, liquidity risk, currency, credit risk, Interest rate risk and operational risk.

• Reputation Risk

Adverse performance of investments originated by OCB may place the bank’s reputation at risk. To mitigate this risk all investments are subjected to extensive due diligence and understanding of the investment thesis prior to undertaking any commitment

• Investment Risk

Investment risk is the major component of the Bank’s overall risk profile. The Bank seeks to manage its Investment risk through each stage of the Investment process, including deal sourcing, acquisition, investment holding period and divestiture. Day-to-day management of the Bank’s investments is overseen by the Investment Management Group, which manages the investment from an operational perspective. The Risk Management Department reviews all investments from the perspective of OCB’s balance sheet and client franchise. Prior to funding an investment, and regardless of size, Risk Management provides an independent assessment of the opportunity, highlighting key risks prior to commitment. Risk Management has independent access to the Board of Directors and updates them on the overall risk profile of the Bank on a regular basis.

• Credit Risk

OCB does not engage in commercial or retail banking. Credit risk arises largely through short-term placements of excess cash through interbank deposits in a conservative manner, with highly rated financial institutions. The Board sets counterparty limits once a year as a percentage of equity based on ratings provided by external rating agencies. Accordingly, as the rating is adjusted, the limits are increased or decreased with ALMC’s approval.

In order to avoid excessive concentration, OCB monitors credit exposures by geographical region, country and rating.

• Liquidity Risk

The ALMC has overall responsibility for managing the Bank’s liquidity and the day-to-day management of liquidity is the responsibility of the treasury department.

OCB strives to maintain a high level of liquidity at all times and has the ability to access large amounts of funds rapidly from short term placement activity.

• Legal Risk

The risk that a counterparty to a transaction will not be able to meet its obligations under law. This may be the case for a variety of reasons. Most fundamentally, the transaction must be sufficiently well documented to be enforceable in a court of law. To ensure that OCB and its investors’ interests are protected, the Bank’s in-house legal counsel is involved throughout the investment acquisition process.

• Currency Risk

OCB does not engage in proprietary foreign exchange trading, hence currency risk primarily arises from its investments in non- US dollars assets. The Bank seeks to mitigate currency risk by match-funding assets with liabilities of the same currency.

• Interest Rate Risk

OCB’s interest rate risk results mainly from exposure to placement of its excess cash. OCB’s policy is to maintain a floating interest rate policy.

• Concentration Risk

This risk arises when a number of counterparties are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. The Banks policies and procedures limit any concentration risk. Additionally, management has established credit limits for geographic and counterparty exposures, which are monitored on a daily basis.

• Operational Risk

The Bank is in the process of developing a comprehensive framework for operational risk management, where all of the Bank’s processes and activities are analyzed and major risks identified, measured and reported. This includes the implementation of all relevant policies and the development of a comprehensive risk register.