Introduction 

Knowing that each risk carries new opportunities, we believe that “sustainable development” can only be achieved by specifying and thus, defining, measuring and managing risk effectively. Providing maximum value to our shareholders, which is the driving concept behind our mission, is possible through effective risk management in all of our operations. Accordingly, as one of the pioneer groups in Turkey, the Sabancı Group has built a strong risk management infrastructure and continues to put into practice a well-defined risk management system. 

Risk Management in  Non-financial Companies 

The Sabancı Group defines risk as a combination of threats and opportunities and implements Enterprise Risk Management in all of the Group companies in order to manage its risks in the most effective manner. All Group companies identify and prioritize their risk and determine detailed action for critical risk through the support and methodology utilized by the Holding Risk Management Department. Risk culture is being adopted and risk management is integrated into our businesses and implemented by risk professionals in all of the Group companies. In order to effectively manage risk, senior management at all of the Group companies continually prepare, update and implement detailed action plans against critical risks and results are reported and monitored constantly. The success rate of the Group companies in risk management represents a crucial step in our performance measurement system. 

The Sabancı Group creates shareholder value through effective management of risks and in 2009, it continued its sustainable growth, as  in past and all necessary action will be taken in order to continue this success in 2010. 

The Sabancı Risk and Insurance Management (SARIM) platform, formed in coordination with the Holding Risk Management Department, exchanges information about Group companies’ risk agendas and develops common action plans. This platform will continue to offer Group-wide risk management and synergy-based solutions. Additionally, in 2009, the “Operational Risk Management Group” was formed within the Sabancı Group. This serves as a platform where we share best practices against operational risk and we form action plans in order to ensure our plants are compatible with international standards. 

Sabancı Group’s “risk tracking and reporting system” was restructured at the end of 2008, parallel to recent developments and will be in practice with the new structure in 2010.

Overall, the Sabancı Group, with its strong capital structure and effective management, is prepared for any challenge that may arise in 2010. The Sabancı Group will overcome all difficulties by closely analyzing events taking place around the world and in Turkey, while taking the necessary actions and forming the right infrastructure to manage every evolving risk. In 2010, as in the past, the Sabancı Group will continue on its successful path.

Risk Management in Financial Companies 

Since the last quarter of 2009, with the first signs of recovery in economic indicators, it has been apparent that the market conditions and liquidity levels have improved. Our financial institutions monitored these developments carefully and managed their risks through strong risk management measurement and calculation systems. Akbank, our largest financial institution, maintained risk, return and growth balance at the optimal level with the help of successful predictions and timely strategic decisions. Moreover, the Bank managed the possible adverse affects of the crisis with prudent risk management. Adherence to the corporate risk management culture and the efficient and effective application of risk management measurement techniques made it possible for our Bank to manage risks appropriately. The Akbank Risk Management team has been following and applying changes and developments in line with best practice risk management processes. At Akbank, risk management is a process that is continuously evolving and improving.

The basics of the Akbank Risk Management philosophy are:

• Detect, manage and monitor market, credit, operational, asset liability risk and other financial risk at an early stage in a proactive manner and appropriately allocate capital among business units,
• Manage risk in a forward-looking manner, determine and analyze risk from the beginning with the help of steering risk strategies, models and parameters,
• Establish a risk management system as an independent structure, separate from, but coordinated with, business units,
• Consider the risk management system as part of the Bank’s organization and integrate it into the system,
• Report all financial risk,
• Provide the highest value to shareholders, clients and employees,
• Be open to learning and change in order to cope with new market conditions and
• Be financially sound and reliable, to establish long-term business relationships with our shareholders and clients with the help of our long-term commitment to deliver the best possible service and products.