Page 18 University of Technology, Jamaica Notes to the Financial Statements 31 March 2020 (expressed in Jamaican dollars unless otherwise indicated) 3. Financial Risk Management The University’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk and cash flow interest rate risk), credit risk and liquidity risk. The University’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the University’s financial performance. The University’s risk management policies are designed to identify and analyse these risks, to set appropriate risk limits and controls, and to monitor the risks and adherence to limits by means of reliable and up-to-date information systems. The University regularly reviews its risk management policies and systems to reflect changes in markets, products and emerging best practice. The University Council is ultimately responsible for the establishment and oversight of the University’s risk management framework. The risk management policies are established to identify and analyse the risks faced by the University, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. The Council has established committees for managing and monitoring risks, as follows: Finance Committee The Finance Committee through the Finance and Business Services Division is responsible for developing and monitoring the University’s financial risk management policies. This committee reports regularly to the Council on its activities. Audit Committee The Audit Committee oversees how management monitors compliance with the University of Technology Act as it relates to its policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the University. The Audit Committee is assisted in its oversight role by the University’s Internal Audit Department. This department undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee. The most important types of risk are credit risk, liquidity risk and market risk. Market risk includes currency risk and interest rate risk. (a) Credit risk The University takes on exposure to credit risk, which is the risk that its students, commercial customers (such as the Students Loan Bureau and scholarship donors) or counterparties will cause financial loss for the University by failing to discharge their contractual obligations. Credit exposures arise principally from the University’s receivables and investment activities. University of Technology, Jamaica 134
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