The condition of the SGB Protection Scheme Participants is subject to constant monitoring by the managing unit, i.e. the Cooperative, in terms of both quantitative, and qualitative assessment.

Among others, the quantitative assessment includes an analysis of:

• Reporting data (balance sheet — structure, tendencies, profit and loss statement, financial ratios)
• Respecting the supervisory regulatory standards
• The extent of limit realization
• input criteria Rating
• Defaulted exposures
• Risk susceptibility
• Assessment of the risk level in the process of SREP (Supervisory Review and Evaluation)

Among others, the qualitative assessment includes an analysis of:

• The scope and advancement of reference procedures
• The scale of improprieties revealed during audits and other external inspections
• The influence of adverse information about one or more Participants on the risk level in other Participants
• Evaluation of the risk management quality in the process of supervisory review and evaluation

Independent Internal Audit in the Banks carried out by the Cooperative Audit Department staff (IPS managing unit) is an important mechanism within the framework of the monitoring system, ensuring proper and secure operating of the IPS-SGB Participants.

Internal Audit:

• Carried out according to uniform principles in all Participants,
• Complete independence and objectivity of examination due to location outside the structures of Banks,
• The frequency and scope of audits results from the analysis of each Participant’s risk levels and profiles,
• Audits focus on the verification of risk pertaining to the business of participants and complete analyses carried out by the Cooperative on the basis of reporting data,
• Post-audit recommendations are issued for the participants by the Cooperative Board of Directors