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Market Risk Review 2009
The Bank’s overarching risk management philosophy is to optimize the use of its risk bearing capacity to support the Bank’s development related activities (i.e. core business risks). To achieve this, the Bank seeks to minimize its exposure to other sources of risk that are incidental to the Bank’s development mandate (the non-core risks). While market risk has always been a relatively limited risk in the context of the Bank’s operations, the financial crisis has highlighted the shifting paradigm. The volatile and even uncertain asset prices, widespread deterioration in credit quality, substantial increases in funding costs and squeezes on liquidity has affected the Bank like all other MBDs.