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Danmarks Nationalbank's risk management


Danmarks Nationalbank manages the risk in relation to administration of the foreign-exchange reserve and Danmarks Nationalbank's bond portfolio.

Financial risks
Danmarks Nationalbank's financial assets and liabilities incur a number of financial risks which affect the accounts. Danmarks Nationalbank's financial risks are mainly market risks, primarily related to interest-rate and exchange-rate fluctuations. The interest-rate risk is managed by spreading investments. Exchange-rate sensitivity chiefly relates to euro accounts. The fixed-exchange-rate policy means that the krone is kept stable vis-à-vis the euro, so the exchange-rate risk is limited. The credit risk is also very small, since Danmarks Nationalbank solely has claims on counterparties with a high credit rating, and since the claims often require a collateral.

Operational risk
Operational risk is the risk of financial loss resulting from inadequate or failed internal processes, people and systems, or from external events. Loss of reputation is also a key concern for Danmarks Nationalbank so that this aspect is also taken into account when assessing operational risk.
Operational risk management comprises analyses of various risk scenarios, ongoing management reporting on potential threats and incidents, and assessments of whether the model's requirements are observed within the organisation.






Last update: 03/31/2014

Facts
The major assets are foreign assets, domestic bonds and loans to Danish banks. The major liabilities are banknotes and coins in circulation, deposits and certificates of deposit, as well as deposits on the central government's accounts.
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