/Institutions/University-of-Dubai/json/2024-2025/Policy-and-Procedure-Manual-local.json

/Institutions/University-of-Dubai/json/2024-2025/Policy-and-Procedure-Manual.json

Policy and Procedure Manual 2024-25 > Fiscal Resources and Financial Management and Budgeting > Financial Risk Management Policy

Financial Risk Management Policy

Policy 

1. This Financial Risk Management Policy serves as an addendum to the UD  Risk Management Policy. It provides specific guidelines pertaining to mitigation of financial risks inherent to the institution's operations. This policy complements and extends the principles outlined in the broader risk management framework established by the University, ensuring a comprehensive approach to safeguarding the institution's financial well-being.

2. The primary objective of the university's financial risk management is to protect and enhance the value of its financial assets, optimize resource allocation, and maintain financial stability. This includes managing risks related to currency exchange, interest rates, liquidity, credit, and other financial instruments

3. The university will conduct regular assessments to identify and evaluate potential financial risks. This process will involve a thorough analysis of market conditions, economic trends, and other factors that may impact the institution's financial position. Identified risks will be categorized based on severity and likelihood of occurrence.

4. To mitigate financial risks, the university implements a range of strategies, including but not limited to diversification of investments, prudent financial planning etc. These strategies will be aligned with the university's overall financial goals and risk appetite.

5. The university is committed to compliance with relevant financial regulations and reporting requirements. The financial risk management activities will be governed by a designated committe responsible for overseeing risk management policies, ensuring adherence to applicable laws, and regularly reporting to relevant stakeholders.

6. The university will maintain open and transparent communication regarding its financial risk management practices. Stakeholders, including the board of trustees, faculty, staff, and students, will be informed regularly about the university's financial risk exposure, mitigation strategies, and outcomes.

7. Ongoing monitoring of financial risk exposures will be conducted, and any significant changes will be reported promptly to the appropriate stakeholders. Regular reports on the effectiveness of risk management strategies will be provided to the university leadership, governing bodies, and other relevant parties.

Roles and  Responsibilities

1. Risk Management Committee:

   1. The RMC committee will meet regularly to assess financial risk exposures, review mitigation strategies, and report findings to the university's leadership.

2. Director of Administration :

   1. The DOA will ensure that financial risk management strategies align with the university's financial goals and regulatory requirements.

3. Finance Manager:

   1. The Finance Manager is responsible for overseeing the implementation of financial risk management strategies.

   2. The Finance Manager will coordinate risk assessment activities, monitor financial indicators, and propose appropriate risk mitigation strategies.

4. Accountants:

   1. Accountants are responsible for accurately recording and reporting financial transactions in compliance with established accounting standards.

   2. Accountants will collaborate with the finance team to ensure timely and accurate financial information for risk assessment.

FRM Strategy

1. In order to safeguard the financial stability and sustainability of UD, it is imperative to implement proactive strategies that effectively address and mitigate potential risks. 

2. The following risk management strategies have been developed to manage various financial exposures, encompassing currency, interest rates, credit, liquidity, and market risks.. 

3. By employing these strategies, UD aims to navigate the complex financial landscape, minimize uncertainties, and maintain a resilient financial position. The adoption of these strategies is guided by a commitment to prudent financial governance and the overarching goal of ensuring the long-term viability of the institution.

1. Credit Risk Management:
   
   UD is committed to implementing a rigorous credit review process for vendors, contractors, and financial institutions. The institution will establish and enforce credit limits to mitigate potential losses due to credit risk.
   

2. Liquidity Risk Management:
   
   UD will maintain sufficient cash reserves and establish access to credit facilities to ensure liquidity in times of need. The institution will regularly assess and manage liquidity risk to maintain financial stability.
   

3. Currency Risk Management:
   
   UD will actively monitor and manage currency risk exposures to minimize the impact of exchange rate fluctuations on financial performance. The institution may use hedging instruments judiciously to mitigate potential currency risks.
   

4. Interest Rate Risk Management:
   
   UD acknowledges the importance of monitoring interest rate environments and will employ appropriate strategies, including interest rate swaps or other derivatives, to manage exposure and safeguard against adverse interest rate movements.
   

5. Market Risk :

UD will systematically identify, assess, and manage market risks associated with fluctuations in exchange rates, interest rates, equity prices, and commodity prices. The institution will employ appropriate hedging strategies and diversification to mitigate adverse market movements.