PASHA_BANK_ANNUAL REPORT 2022

106 PASHA Bank 2022 Annual Report determination of necessary capital amount were performed and shared with the Board of Directors within the scope of Internal Capital Adequacy Assessment Process (ICAAP). Risks that the Bank may be exposed to and the risk appetite regarding these risks were identified by taking the stress test results into consideration and the Risk Appetite Statement was regularly updated. Policies and procedures of Risk Management Department are updated to include the Bank’s current structure and risks that the Bank may be exposed to. Improvement of technical infrastructure and competences were achieved in terms of the Bank’s risk identification, monitoring, control, risk reduction and stress testing processes within the scope of the action plans established so that Risk Health Indicators (RHI) scores reach the expected levels, which is among the Bank’s strategic key performance indicators. Assessments were made within the Bank to increase risk awareness within the scope of the risk culture project of the Holding. Improvement areas were identified and action plans were established. Internal systems departments are at the focus of all transactions within the Bank in terms of risk, organization, quality management, effectiveness, adequacy and compliance. In this context, Internal Control and Risk Management Departments which constitute the second line of defense will continue its activities such as updating the infrastructure, performing second level controls, monitoring and reporting of results, fulfilling regulatory requirements and demands, improvement of the Bank’s internal control and risk management environment in 2023. Compliance Department will also continue its monitoring and control activities in accordance with the legislation. In 2023, the Internal Audit Department will continue its auditing responsibilities for the efficacy, adequacy, and compliance of the Bank’s internal control and risk management environment with the same scope and care. Assessments of the Audit Committee on the Activities of Internal Systems