Wednesday, February 1, 2023 18:5827

Risk Management

Risk Management

The Risk Management System functions and is constantly improved in order to provide a continuity of services, financial stability and efficiency of activities in the Central Securities Depository.

The Risk Management System of the Central Securities Depository has been built-up according to the requirements of government entity for the regulation of securities market and international practice.

In the frameworks of risk management the Central Securities Depository regularly carries assessment of risk level, quantitative risk assessment, assessment of equity capital adequacy to cover risks, as well as stress testing.

During stress testing the Central Securities Depository uses the following scenarios:

1) market risks are the scenarios of changing current cost of financial instruments, interest rates and foreign exchange rates;

2) operational risks are the scenarios of overloading, failures and (or) other malfunctions in operations of the Central Securities Depository’s systems.

The Central Securities Depository uses the results of risk assessment and stress testing to choose and take further measures on risk management, maintenance of financial stability and operational safety of the Central Securities Depository.

Risk Insurance

The Central Securities Depository and Insurance Company London-Almaty JSC entered into the Risk Insurance Agreement on February 12, 2018 with the insurance period from February 12, 2018 to December 31, 2018. The insured sum is set in the amount of KZT 500 mln.

The insurance objects are the valuable interests of the Central Securities Depository connected with a risk of incurring losses, including its liability for inflicting loss to valuable interests of the third parties while implementing professional activities, as a result of illegal actions of the third parties, unlawful acts of the Central Securities Depository’s employees, computer failures and crimes, other accidents.

Since 2013 the Central Securities Depository has been insuring its risks every year. No insured accidents have occurred for the specified period.

Business Continuity Management

The Central Securities Depository, being infrastructure of the financial market, develops the system of business continuity management on a constant basis in accordance with the best practice. The Business Continuity Management Policy and Plans of the Central Securities Depository have been developed according to the Business Continuity Management international standards.

To uninterruptedly render services the Central Securities Depository has a full-fledged infrastructure that is the Disaster Recovery Site including the Data-Center and Backup Office, completed with necessary resources and ready to immediate activation.

Business Continuity Procedures of the Central Securities Depository, including use of the Disaster Recovery Site, are regularly tested. At least once in a half-year the Central Securities Depository switches its operations to the Disaster Recovery Site.

Operational Audit

In 2016 KPMG Tax and Advisory Company conducted operational audit according to requirements of ISAE 3402 International Standard. Type 2 (International Standard on Assurance Engagements).

Operational audit covered all operational processes performed by the Central Securities Depository for the period of January 01 through December 31, 2015 within depository activities, corporate actions, certain types of bank operations, maintaining the Derivative Transaction Register System, maintaining the Securities Holders Register System of the Integrated Securities Registrar JSC, allocation of international identifiers to financial instruments, allocation of the identifiers to rights of demand.

Operational audit consisted of the following:

1) conduct of pre-audit procedures;

2) description of available administrative, procedural, and technical measures focused on risk management and mitigation;

3) carry out of the control efficiency pre-testing out of the control list;

4) make the control efficiency final testing;

5) submission of preliminary and final audit statements.

Thomas Murray Rating

Follow-up 2016 results the Thomas Murray Company has confirmed the Central Securities Depository’s "A +" rating meeting a low risk level. Moreover, the Rating Agency has reviewed its outlook from “stable’ to “positive” due to positive appraisal of basic risk mitigation measures taken by the Central Securities Depository.


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