169
Good Practice
Financial Markets
Global Compact International Yearbook 2013
risk categories to which AAIB is exposed.
This is addressed mainly through the fol-
lowing functions under its supervision:
Credit Risk, Market Risk, Operational
Risk, and Policies and Procedures Unit.
Internal Audit
AAIB has a centralized, independent
Internal Audit function, which reports
directly to the Board’s Audit Committee.
The Division’s primary focus is on the
following activities:
•
assessing the effectiveness and adequa-
cy of internal policies and procedures;
•
reviewing the Bank’s financial report-
ing;
•
conducting risk-based audits on the
Bank’s branches and functions (includ-
ing other control functions) to evaluate /
validate the effectiveness of internal
control systems within the Bank, as
well as to review the compliance of
branches and functions with internal
and regulatory policies and guidelines;
•
following up on the implementation
of corrective actions related to audit
findings.
Internal Control
The Internal Control Division is respon-
sible for ensuring that the established
controls are complied with. In essence,
the Division is responsible for review-
ing the daily transactions on the Bank’s
ledgers to ensure their proper execution,
documentation, and compliance with
regulatory and internal regulations, poli-
cies, and guidelines. Its role expands to
the regular review of various functions
at the branch level.
Compliance Function
The main role of AAIB’s Compliance
Function is to safeguard the Bank
against “compliance risk,” which is
defined as the risk of legal or regula-
tory sanctions, material financial loss,
or loss to reputation a bank may suffer
as a result of its failure to comply with
compliance laws, rules, and standards
applicable to its banking activities.
AAIB’s Compliance Function has access
to the Board Audit Committee, which
ensures the department’s neutrality
and independence.
Furthermore, AAIB has created the po-
sition of Corporate Governance Advi-
sor to provide support to management
and the Board’s Corporate Governance
Committee on the implementation of
best practices and the assessment of the
overall governance framework.
Facing Changes and Challenges
Egypt’s revolution created instability
that threatened the security and flow
of operations in the country’s financial
sector. As a corporation with effective
management mechanism, AAIB’s Board
of Directors claimed the expansion of
Corporate Governance Committees in
Egypt to include Risk and Information
Technology Committees. All of AAIB’s
Corporate Governance Committees are
working according to the terms of ref-
erence issued by the Board of Directors
in 2011. The committees abide by the
minimum requirements of the terms of
reference and reassess the terms every
year. The committees are not limited to
senior officials and decision-makers but
include all stakeholders. This inserts new
blood into AAIB’s corporate culture and
encourages the independence of various
functions such as Compliance, Audit,
Control, and Risk.
Juniors are observers: AAIB uses different
approaches to surpass the traditional
corporate governance goals, whereby the
Corporate Governance Committees are
not limited to standard scenarios. This
means that the Corporate Governance
Committees are not limited to senior
management in the Bank but include
juniors from all functions to integrate
corporate governance from the whole
bank.
Comply or justify: AAIB follows a strict
policy to govern and control the institu-
tion. All processes comply with the fol-
lowing guidelines for the Central Bank
of Egypt, the Center for International
Private Enterprise, and the Bank for
International Settlement. “If you can-
not comply, then you have to justify.”
Sustainable
Finance in Egypt
For development to be sustainable,
it must not only seek profitability
but must address social justice;
equality; reduce – and eventu-
ally eliminate – poverty; preserve
natural resources; and remain
within the limits imposed by the
ecosystem. AAIB has partnered
with the United Nations Develop-
ment Programme to enhance the
competitiveness of the financial
sector in Egypt and to embrace the
ESG agenda to establish sustain-
able growth. Sustainable finance
must contribute to the economic
growth of the countries.
The objectives of the partnership
are:
•
promoting awareness of
sustainable finance in Egypt;
•
developing a national model for
inclusive banking, which in turn
enables the financial sector a
strategy for offering financial
assistance to low-income
families and individuals;
•
reducing and mitigating the
financial risks of big markets by
distributing wealth and risks on
different market segmentations;
•
developing banking practices
that aim to have a positive
impact on people, profits,
and the environment and
encouraging ethical business
practices.