RISKS IN THE ALLOCATION OF ASSETS. RISK MANAGEMENT

The following financial risks accompanying the investment of Eesti Pank's assets are constantly measured:

   currency risk

   interest rate risk

   credit risk

   liquidity risk

When possible, risks are measured by the risk variable VaR and their ratio to the benchmark portfolio is limited. Those financial risks that cannot be measured by VaR are limited by their amount or by other parameters.

All risks are measured and managed by optimal diversification of the investment portfolio's structure and careful selection of instruments and trading partners. There are general framework rules for every listed risk, which prevent risks that are unsuitable for a central bank from being taken. Compliance with risk limits is continually monitored, mostly in real time.