Page 5 - Pillar 3 Disclosure
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knowledge). The Asset and Liability Committee (ALCO) is responsible for approving credit lines to individual institutions and monitoring actual 


Credit risk is increased if there is a concentration of exposures within the investments held, this is called concentration risk. Concentration risk 

arises as a result of the concentration of exposures within the same category, whether it is geographical location, product type, industry sector 

or counterparty type. These risks are managed through adherence to Board approved lending and liquidity policies. The Society recognises that 

concentration risk is potentially significant in view of the fact that around 70% of the entire balance sheet is held in the form of residential 

mortgage assets.

The Society, as a regional building society, has geographic concentration in its core lending area. This is considered appropriate for a Society of 

its size. Table 4 on page 9 illustrates the spread of the Society’s mortgage lending.

Mortgage concentration risk is considered by the Retail Credit Risk Committee and Treasury Counterparty concentration risk is considered by the 

Assets and Liabilities committee. Exceptions are reported to the Board Risk Committee.

Conduct risk

Conduct risk arises when a firm’s behaviour results in inappropriate or poor outcomes for customers. The Society’s culture is based upon 

ensuring every member has a right to expect that their relationship with the Society will be conducted in a fair and consistent manner. The 

Society sees its members as individuals, with individual requirements and expectations and this approach is demonstrated within the conduct risk 


Regulatory Risk

Regulatory risk is the risk that the volume and complexity of regulatory issues may impact the Society’s ability to compete and grow. In April 

2013 the formal transition to the new regulatory framework was implemented. Under the framework prudential supervision was transferred to a 

subsidiary of the Bank of England, the PRA and consumer protection and market regulation was transferred to the FCA. The Board will continue 

to monitor developments under the new ‘twin peaks’ regime together with all other applicable regulatory changes, to ensure that the Society 

continues to meet all of its regulatory requirements.

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