Risk Management in Treasury Operations Group 3 Risk Management in Treasury Operations Azerbaijan, Bulgaria, Croatia, Georgia, Hungary, Serbia, Turkey Vienna May 31st,2017

1. Is risk management part of regular responsibilities of any of the functions / units of the treasury in your country? Azerbaijan Bulgaria Croatia Georgia Hungary Serbia Turkey YES/NO Appropriation Control N Y Payment Processing and Revenue (Collection) Recording and Reporting Oversight of Bank Accounts and Basic Cash Management Assets and Liability Management Financial Reporting

Is risk management part of regular responsibilities of any of the functions / units of the treasury in your country? (continuation) Azerbaijan Bulgaria Croatia Georgia Hungary Serbia Turkey Accounting and Internal Control Policies N Y In-year budget execution reporting Other – please Specify Payroll calculation n/a Baby bonds Mng

2. Was formal risk analysis / assessment undertaken for any of the treasury functions / processes? If yes, specify the functions / processes and context of the analysis. Is this a regular / periodic activity or a one – time undertaking? Azerbaijan Bulgaria Croatia Georgia Hungary Serbia Turkey Y/N R/OT Y/ N R/ OT Y/ N Appropriation Control N Y R Ot OT Payment Processing and Revenue (Collection) Recording and Reporting Oversight of Bank Accounts and Basic Cash Management y ot Assets and Liability Management

2. Was formal risk analysis / assessment undertaken for any of the treasury functions / processes? If yes, specify the functions / processes and context of the analysis. Is this a regular / periodic activity or a one – time undertaking? (continuation) Azerbaijan Bulgaria Croatia Georgia Hungary Serbia Turkey Y/N R/OT Y/ N R/ OT Y/ N Financial Reporting N Y R Ot Accounting and Internal Control Policies In-year budget execution reporting ICT maybe y Other – budget preparation n/a Other – please Specify

3. Does your treasury have internal documents / methodology that define approaches to risk management? If yes, specify the documents. Azerbaijan Bulgaria Croatia Georgia Hungary Serbia Turkey YES/NO N Y 1 Risk mng Strategy Risk Mng Methodology which is the basis for the Risk register Risk Mng Manuals Internal controls guideline 2 Internal control methodology approved by the Minister of finance Instruction for preparation of strategic plans Internal control manuals Working principles for the internal controls and risk mng committee; legislation on principles on debt and risk mng 3 Integrity manual Risk Mng guideline 4 * Internal control methodology approved by the Minister of finance Business continuity mng guidelines 5 Strategic benchmarks guideline (confidential)

BENEFITS/RISKS/MITIGATION of RISKS Do you consider that the concept of the ‘green corridor’ could work in your countries? BENEFITS/RISKS/MITIGATION of RISKS Azerbaijan: benefits – frees people to get assigned to different tasks, risks are part of taking new steps, could be mitigated by selectively/randomly checking even small amount of payments form time to time Bulgaria: one of benefits is we avoid human element, process will get cheaper (less people will be assigned to control payments), RISKS – technical issues, IT security, fraud for budgetary side, Mitigation – to set appropriate control environment and activities Georgia – appropriation control can be handled by the system, and cannot be changed on purpose but IT interference. Fraud cannot be completely avoided but compared to overall budget they do not contribute to any meaningful % of the budget. Considering that “green corridor” is only dedicated to a well defined low risk payments and industries.

BENEFITS/RISKS/MITIGATION of RISKS (continuation) Do you consider that the concept of the ‘green corridor’ could work in your countries? BENEFITS/RISKS/MITIGATION of RISKS (continuation) Croatia – invoice approval system is built in such way that switching to “green corridor” won’t make difference for them since their system is in a way a different type of “green corridor”. Hungary – is introducing new system and it is believed that they would benefit from “green corridor” that it would take required changes to their Risk Mng System framework. Turkey – all the controls points are conducted before invoices enter Treaury’s system therefore no need for “green corridor” т