Fostering risk culture at BIDV

DIep Duc

Mr. Ngo Van Dung, member of the Board of Directors of BIDV talked to BIDV Review about risk culture and its implications.

In 2020, the Board of Directors issued Resolution 534 on building risk culture at BIDV. Can you please share more about this?

Looking back at BIDV’s history, the bank has made great contributions to Vietnam's economy since its inception. This has been a long and difficult journey for generations of BIDV leaders and staffs. BIDV has achieved laudable achievements in business scale, branding and prestige in the field of banking and finance as well as social security activities.

However, besides the achievements, there remain drawbacks that BIDV has definitely to overcome in the near future. Over many years of operation and development, BIDV has formulated and continuously updated operational regulations in a standardised, efficient and advanced manner to meet the economic situation of Vietnam from time to time. Nevertheless, consequences incurred during the business process that need to be addressed. Such consequences are attributed to many reasons, with the first one being the lack of or insufficient implementation of risk culture.

After 2 years of survey and study and dozens of drafts at different levels, in July 2020, the Board of Directors officially issued Resolution 534, expecting to build a positive and responsible working environment from senior leaders to officers. This is the highest goal specified in the resolution. In order to meet this expectation, risk culture must be developed professionally so that both leaders and officers can practice in their day-to-day work.

So what is the role of risk culture in the current business environment?

Banking business is risk-based and bank's risks are the total risks of the

economy. Risks should be perceived right. Risks have two states: The first state: we go beyond the limits and take the daily risks for granted. The second one is that we think because it is a risk category and we hesitate or even not to act.

To better understand these two states, Resolution 534 specifies principles and requirements for implementation. Simply put, banking business is associated with risks so we must take risk at a level that can be identified, measured and controlled on the basis of optimising profits and mitigating risks. This is the right mindset. We will not do what we are unable to control.

Risk management is one of the important activities of a bank. What difference can risk culture make?

If the resolution is cascaded smoothly and methodically from Head Office to branches, I believe we will see a BIDV at a different height from the current one, not only in the domestic market but also in the regional market.

In addition, we also build a responsible, transparent and reliable working environment. One of the most important things is that when we implement risk culture in a standardised and methodical manner, income of employees will be significantly improved - this is an essential factor we trust that all employees will believe and practice risk culture voluntarily and regularly.

Mr. Ngo Van Dung, BOD member, BIDV

What factors help to build a successful risk culture?

In my opinion, there are two basic factors. The first factor is the leadership at all levels. They must have the right and consistent perception in directing their units. The leaders must be role models for employees to follow and make changes. Besides, we should think positively and act responsibly.

The next factor is communication. Previously, the concept of risk culture was still quite vague for most of the staff. We have to convey the concept in new ways to employees, firstly starting with communicating the spirit of the resolution.

The resolution specifies contents, implementation methods, and solutions for each level of management. In addition, we can create forums on risk culture via Workplace as well as giving examples of employees who fully comply with regulations and act responsibly. The success of the resolution depends significantly on human factors. Therefore, by giving examples of rightdoers and wrongdoers, we can have lessons to spread this resolution deeply and make it a value of BIDV for years to come.