Page 80 - BAM ONE REPORT 2565 (ENGLISH VERSION)

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and relevant work units to keep abreast of the Company’s existing risk levels and position so that they would get
prepared to acquire funds in an adequate amount or to mitigate risks in the period where the Company experiences
negative liquidity or tendency of liquidity crunch.

2. Credit risk refers to the chance or possibility of the Company’s counterparty failing to fulfil the obligations
Bangkok Commercial Asset Management Public Co., Ltd.
agreed with the Company with respect to the asset management company (AMC) business which does not generate
income from lending to customers, but from management of NPLs and NPAs, and is thus mainly prone to asset quality risk.

Tools for managing asset quality risk
• The Company determines purchasing prices of NPLs and NPAs using relevant factors thereof, e.g. debtors’

history, debt obligation, collateral security quality and quality of NPAs, as well as such external circumstances
as competition and economic conditions, etc. to work out projection of revenue from debt collection and
disposition of assets.
• The Company manages debtors under debt restructuring agreements with consideration and review of

debtors’ repayment capability through the aging system so that early warning can be given before such
debtors’ default of payment. Legal action will be taken against debtors who fail to make debt payment in
order to mitigate risks from debtors’ non-compliance with the debt restructuring agreements.

3. Market risk refers to risk of potential damage to the Company arising from changes in value of assets and
liabilities driven by movement of interest rates, exchange rates and prices. The Company’s business is mainly prone
to risk of changes in market prices of collateral and NPAs, or risk of changes in assets’ value according to market condition
which will lead to an increase or decrease in revenues.

Tools for managing market risk
The Company reviews appraisal prices by applying the BOT Regulation for financial institutions. Review of the

appraisal prices of NPL collateral security is conducted every 3 years and that of the appraisal prices of NPAs every
year, or when there are significant changes in surrounding situations. The Company also sets aside adequate reserves

and allowance for impairment of assets in order to cover potential damage from depreciation and impairment of collaterals
of NPLs and NPAs.

4.) Compliance risk

Compliance risk refers to risk arising from the Company’s non-compliance with or failure to fully or correctly
comply with the laws, rules, regulations, standards, provisions, orders, and guidelines that are enforceable over its
business transactions. The compliance risk may lead to financial losses or impairment of the reputation and image of

the Company.

Tools for managing compliance risk
The Company has formulated operational methods and procedures for managing compliance risk, based on the
standards specified by regulatory agencies, professional standards, and the laws. The Company also seeks opinions

from the BOT in the annual audit of its business in order to ensure ongoing improvement of its business operation.