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37.2 Operational Risk

Operational risk is the risk that the Company could incur losses as a result of inadequate
corporate governance and internal controls, which may be related to internal functional
processes, personnel, work systems, or external events that affect the Company’s revenue

and financial position.

37.3 Financial Risk

a) Credit risk
Bangkok Commercial Asset Management Public Co., Ltd.
Credit risk management is the management of the risk that a debtor or counterparty of the
Company will be unable to comply with contracts and relates to non-performing debtors that

were transferred to or acquired by the Company, installment sales receivables and the
creation of obligations. Its main objective is to ensure the quality of the Company's asset

management transactions, their compliance with relevant laws and regulations and
appropriate consideration of risk.

For asset management companies (AMCs) whose revenues are not derived from the loan
facilities to customers, but from the management and disposal of NPLs/NPAs, the principal

risk is asset quality risk.

Tools for managing asset quality risk

- The prices of NPLs/NPAs are determined based on consideration of key relevant
factors, which comprise debtor status/track record, indebtedness, quality of collateral,

quality of the NPAs, and external environmental factors such as the competitive
environment and the economic situation, so that the Company sets appropriate prices

for asset acquisitions that are not higher than the appraised value of collateral assets,
in order to reduce the risk that the Company will acquire assets at prices that are too
high.

- Management of debtors under debt restructuring agreements who may not be able to

settle debts in accordance with the agreement or the agreed conditions, requires the
Company to consider/ review the debt servicing capability of each debtor. An aging
system is used, which reports receivables overdue more than 30 days, 60 days and 90

days to provide an early warning of default and time to negotiate a solution. If a solution
cannot be negotiated, the legal process has to be followed in order to enforce conditions.

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