Investment activities and to manage its exposure to fluctuations in interest and currency rates

Derivate and foreign exchange transactions involve credit risk. The effective management of credit

risk is vital to the success of IBRD's funding, investment and asset/liability management activities. The

Monitoring and managing of these risks is a continuous process due to changing market environments.

IBRD controls the credit risk arising from investments, derivatives and foreign exchange transactions

Through its credit approval process, the use of collateral agreements and risk limits, and monitoring

Procedures. The credit approval process involves evaluating counterparty creditworthiness, assigning

Credit limits and determining the risk profile of specific transactions. Credit limits are calculated and

Monitored on the basis of potential exposures taking into consideration current market values, estimates

Of potential future movements in those values and collateral agreements with counterparties.

Vocabulary Notes to Text 10.7.1.5.

Contractual obligations — договорные обязательства

Debt instruments — долговые обязательства

Соrpоrate entities — корпоративные подразделения

AAA rated instruments — высокий кредитный рейтинг

Derivative transaction — сделка с производными