Page 84 - English

13. Financial risk management
The Regulatory Authority’s financial liabilities comprise trade payables and refunds to customers. The main purpose of these financial liabilities
is to finance the Regulatory Authority’s operations and to provide guarantees to support
its operations. The Regulatory Authority’s financial assets include fees, interest, other receivables, amount due from a related party, bank balances and cash that derive directly from its operations.
The Regulatory Authority
is exposed to market risk,
credit risk and liquidity risk.
The management has overall responsibility for the establishment and oversight of the Regulatory Authority’s risk management framework. The Regulatory Authority’s risk management policies are established to identify and analyse the risks faced by the Regulatory Authority, to
set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Regulatory Authority’s activities.
This note presents information about the Regulatory Authority’s exposure to each of the above risks. Further quantitative disclosures are included throughout 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 Regulatory Authority’s principal business is conducted in United States Dollar and Qatari Riyal. As the Qatari Riyal is pegged to the United States Dollar, there is considered to be minimal currency risk.
Equity price risk
Equity price risk is the risk that the fair values of equities decrease as a result of changes in the levels of equity indices and the value of individual stocks. The Regulatory Authority is not exposed to
equity price risk since it does not hold any investment in equity instruments.
Credit risk
Credit risk is the risk that one
party to a financial instrument
will cause a financial loss for the other party by failing to discharge its obligation. The Regulatory Authority exposure to credit
risk is indicated by the carrying values of its assets which consist principally of bank balances, fees and other receivables.
Market risk
Market risk is the risk that changes in market prices, such as interest rates and foreign currency exchange rates will affect the Branch’s profit or the value of its holdings of financial instruments. The objective of market risk management is to manage and control the market risk exposure within acceptable parameters, while optimizing return.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Regulatory Authority
is not exposed to interest rate
risk on its interest bearing assets (bank deposits) as the interest rate on bank deposits 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 variables
held constant, as The Regulatory Authority does not hold any floating rate financial assets or financial liabilities at the reporting date.
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