ECCB 2022-2023 Annual Report and Financial Statements

Eastern Caribbean Central Bank Notes to the Financial Statements For the year ended 31 March 2023 (Expressed in Eastern Caribbean dollars)

3. Financial risk management (continued)

Operational risk (continued)

g)

Compliance with the Bank’s Standards is supported by a programme of periodic reviews undertaken by the Internal Audit Department. The results of the reviews are discussed with the management of the department to which they relate and summaries are submitted to the Board Audit and Risk Committee and Executive Committee of the Bank.

h) Strategic risk

The ECCB’s Strategic Plan 2022-2026 guides the Bank’s operation. The Strategic Plan 2022-2026 hinges on five (5) strategic themes, which reflect the purpose of the Bank, namely: a. Financial stability; b. Payments modernization and financial inclusion; c. Digital transformation; d. Organizational effectiveness and development; and e. Environment, social and corporate governance. The effective delivery of the strategic initiatives as contained in the plan is heavily dependent on the supporting policies and operations, which have attendant risks. These risks may be influenced by a wide range of internal and external factors, including an inappropriate use of resources or a fundamental change in the circumstances on which the assumptions were predicated. The Bank has therefore identified specific monitoring frameworks and reporting lines to minimize any negative impact of a perceived or actual failure to deliver on its strategic objectives. The Bank’s financial statements and its financial results are influenced by accounting policies, assumptions, estimates and management judgement, which have to be made in the course of preparation of the financial statements. All estimates and assumptions required are in conformity with IFRS and are best estimates undertaken in accordance with the applicable standard. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results. Management also exercises judgement in applying the Bank’s accounting policies. The estimates and assumptions that have a significant risk of causing material adjustments to the carrying amounts of assets and liabilities within the next financial year are discussed below.

4. Critical accounting estimates and judgements in applying accounting policies

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