Risk is a concept that encompasses a variety of factors creating uncertainty or deviation from an organization’s objectives. This concept not only includes threats to the organization’s strength or existence but also potential opportunities. The financial services sector which Ziraat Bank operates in is shaped by various components ranging from economic and geopolitical developments to changing regulations and global trends, as well as societal issues. As it navigates an environment of constant change to achieve its goals and create long-term value for stakeholders, the Bank faces various risks.
In line with its effective policies and strategies, Ziraat Bank closely monitors existing and potential risks and implements proactive risk management practices to contribute to the sustainability of the ecosystem.
The following table provides a general overview of the key risks aligned with Ziraat Bank’s strategy and the Bank’s responses to them:
Strategic Foundations |
Risks |
Ziraat Bank’s Responses |
Steady Growth |
- Being affected by adverse economic developments such as high inflation, slowing GDP growth, volatility in exchange rates and interest rates, and global economic uncertainty,
- The Banking sector may be subjected to additional obligations brought about by new regulations in national and international laws, regulations and directives, resulting in an increase in workload,
- The increased sensitivity of certain sectors to sectoral risks due to selective credit policies and the customers in the Bank’s credit portfolio experiencing difficulty in completing payments
|
- Implementing strategies that enhance resilience against economic uncertainties, such as tracking macroeconomic developments and creating necessary scenarios,
- Maintaining long-term sustainability through effective control of resources and costs,
- Strengthening the robust funding structure through new partnerships,
- Ensuring the organizational structure can rapidly respond to all regulatory changes in both quantity and quality, and maintaining this structure continuously,
- Improving credit assessment processes to proactively manage credit quality and diversify focus sectors.
|
Business Model of the Future |
- The rapid change and advancement in digital technologies pose challenges for adapting the Bank’s business model to new technologies and the potential loss of customers and stakeholders.
- Delays in structural transformation processes leading to increased investment costs,
- Failure to accurately identify customer needs,
- The competitive environment created by other banks and fintech companies investing in digitization
|
- To ensure rapid integration of digital transformation into business processes by designing innovative financial products and services,
- To diversify and enhance transactions offered through digital channels,
- To invest in updating technological infrastructure and keeping abreast of innovations,
- To maintain the Bank’s reputation among internal and external stakeholders with a fast and solution-oriented service approach,
- To reach data-driven decisions and proactively meet customer needs,
- To improve data governance processes to ensure end-to-end corporate management of data,
- To develop new products and services to offer customized financial solutions to customers.
|
Advanced Technological Infrastructure |
- The increasing the risk of cyber-attacks in parallel with advancing technology, posing data security risks,
- Anomalies undetectable by Artificial Intelligence algorithms,
- The prolonged setup time of technological infrastructure to meet the rapid change in customer needs,
- The increasing variety of sources of information rendering access to accurate and reliable information more difficult,
- The high cost associated with the setup and integration of advanced technological infrastructure.
|
- Positioning as a reliable bank through implemented high-level security measures,
- Strengthening the structure of the Cyber Security Center,
- Stepping up investments in cybersecurity and raising employee awareness,
- Standardizing technology integration and management processes, and enhancing automation,
- Continuously modernizing and standardizing data security processes,
- Achieving cost reductions as a result of conducting the Bank’s analytical and operational transactions in a technological manner,
- Embracing a flexible approach to adapt to the pace of technology and adopting new marketing strategies to increase the return on investment.
|
Efficient and Lean Processes |
- The inability of lean processes and automation to sufficiently focus on each customer’s specific needs and requests,
- Rapid changes in technology necessitating continuous investment and system updates by the Bank,
- The challenge of lean and efficient processes in quickly adapting to evolving customer needs and market conditions,
- The potential security vulnerabilities posed by institutional system integration processes.
|
- Focusing on providing personalized products and services by leveraging technologies such as data analysis and Artificial Intelligence,
- Keeping a finger on the pulse of technological changes and performing necessary updates in a timely manner,
- Documenting processes in a clear and transparent manner to ensure understanding by all stakeholders,
- Increasing new customer acquisition with efficient and lean digital solutions,
- Reducing operational burdens at branches by including more operational processes under OPİM (Operations Management and Information Systems),
- Implementing strong security measures during integration processes and adopting a proactive approach towards tackling cyber-attacks,
- Providing customers with alternative communication channels and options, embracing a people-focused approach in customer service.
|
Developing Organization and Happy Employees |
- Failure to recruit a sufficient number of competent employees in line with the updated organizational structure,
- Inability to ensure equal opportunity in organizational restructuring,
- Potential disruptions in business processes, loss of efficiency and weakening of competitiveness due to the inability to address any lack of competency that may arise in employees due to constantly evolving technology,
- Weakness in corporate knowledge accumulation and innovation due to insufficient sharing of information and skills between different departments and teams,
- Diminished adherence to corporate values, lack of communication and the emergence of an atmosphere of distrust, undermining the strong corporate culture,
- Potential negative perceptions due to disputes related to unionization and collective bargaining agreements,
- Incidents such as accidents resulting from inadequate occupational health and safety practices for employees and reputational damage.
|
- Implementing an in-house continuous training culture aimed at increasing the competencies of employees, taking into account equality of opportunity,
- Establishing communication channels that encourage open and transparent communication between different departments and teams,
- Preserving corporate values and traditions, promoting open and transparent communication and fostering a culture of trust,
- Developing training programs aimed at increasing financial literacy among all stakeholders,
- Continuously improving the employee experience through investments in both professional and personal development and motivation-enhancing practices,
- Maintaining high levels of internal stakeholder communication through the implementation of a Satisfaction Barometer,
- Organizing comprehensive and ongoing training programs to ensure that employees are proficient in current technologies.
|
Platform Banking |
- Failure to establish an adequate infrastructure to address threats in information security and cybersecurity,
- Costs associated with implementing security systems to prevent potential data breaches and unauthorized transactions,
- Low platform usage due to the time required for customers to adapt to new platforms.
|
- Providing customers with services that are available anytime, anywhere across various platforms within the framework of service models of the future,
- Enriching service platforms with Ziraat Super Branch and Ziraat Dinamik Banka A.Ş.,
- Ensuring that the platform banking system positively impacts the customer experience,
- Offering customers the necessary support and feedback mechanisms for platform usage, continuously improving platforms based on customer expectations,
- Having the potential for product diversification and inclusive product development,
- Maintaining the Bank’s reputation by developing user-friendly platforms for external stakeholders.
|
Global Bank |
- Country risks that may arise in locations where international subsidiaries and branches are located,
- Difficulties in complying with regulations in countries within the Global Bank network,
- Failure to achieve digital integration with subsidiaries and branches within the Global Bank network,
- Increased operational risks due to different infrastructures associated with operating in different regions.
|
- To maximize customer satisfaction by producing integrated financial solutions in all countries where Ziraat Finance Group operates,
- To produce the same high-technology solutions in all domestic and foreign subsidiary banks, branches and financial companies,
- To become a global financial hub,
- To efficiently deliver financial services to customers leveraging a global and extensive branch network and economies of scale,
- To establish a robust system for monitoring legal and regulatory changes and updating compliance procedures,
- To establish a strong risk management and control system,
- To standardize and automate operational processes.
|
Responsible Banking |
- The need for swift action regarding the integration of sustainability approaches and management principles into the Bank’s processes,
- The reputation and market risks arising from potential environmentally harmful practices of financed companies,
- The differentiation in sectors’ business models due to climate change and uncertainties it may bring in the near future,
- Loss of reputation that may occur as a result of ineffective management of climate change risks.
|
- To be a bank that applies responsible banking principles in green and inclusive economic growth,
- To simultaneously monitor and take action on national and international regulations,
- To ensure effective environmental and social risk management through the policies followed in the lending processes,
- To report to the Carbon Disclosure Project (CDP),
- To increase the share of green transformation and sustainability-focused financial products in the portfolio.
|
