Page 132 - Annual Report 2019

129 ANNUAL REPORT 2019 QFC REGULATORY AUTHORITY FINANCIAL STATEMENTS

16. Financial Risk Management

The QFC Regulatory Authority’s financial liabilities comprise accounts payable, Market risk
accrued expenses and lease liabilities. The main purpose of these financial liabilities Market risk is the risk that changes in market prices, such as interest rates
is to finance the QFC Regulatory Authority’s operations and to provide guarantees to and foreign currency exchange rates, will affect the profit or the value
support its operations. The QFC Regulatory Authority’s financial assets include interest of the QFC Regulatory Authority’s holdings of financial instruments. The
receivables, other receivables, financial penalties receivable, amounts due from related objective of market risk management is to manage and control the market
parties, bank balances and short-term deposits that derive directly from its operations.
risk exposure within acceptable parameters, while optimising return.
The QFC Regulatory Authority is exposed to market risk, credit risk and liquidity risk.
The management has overall responsibility for the establishment and oversight of Interest rate risk
the QFC Regulatory Authority’s risk management framework. The QFC Regulatory Interest rate risk is the risk that the fair value or future cash flows of a
Authority’s risk management policies are established to identify and analyse the financial instrument will fluctuate due to changes in market interest rates.
risks it faces, to set appropriate risk limits and controls, and to monitor risks and The QFC Regulatory Authority is not exposed to interest rate risk on its
adherence to limits. Risk management policies and systems are reviewed regularly to interest-bearing assets (bank deposits) as the interest rate on bank deposits
reflect changes in market conditions and the QFC Regulatory Authority’s activities. is fixed. The statement of comprehensive income and equity is not sensitive
to the effect of reasonable possible changes in interest rates, with all other
This note presents information about the QFC Regulatory Authority’s exposure to variables held constant, as the QFC Regulatory Authority does not hold any
each of the above risks. Further quantitative disclosures are included throughout floating rate financial assets or financial liabilities at the reporting date.
these financial statements.
Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate due to changes in foreign exchange rates. The QFC
Regulatory Authority’s principal business is conducted in United States Dollars
and Qatari Riyals. As the Qatari Riyal is pegged to the United States Dollar,
there is considered to be minimal currency risk.