b'A N N U A L R E P O R T 2 0 1 7 - 2 0 1 8NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2018(Expressed in Trinidad and Tobago Dollars)24. Financial risk managementThe NIBTTs activities expose it to credit risk, liquidity risk and market risk (specifically interest rate risk and currency risk). Its principal financial instruments comprise investment securities, mortgage advances, fixed deposits, cash and cash equivalents and borrowings. Income earned from investments, together with the excess of contributions after benefits are paid, are used to earn above average interest rate margins through the investing in high-quality, high-yielding assets with acceptable levels of risk.Credit riskCredit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. NIBTT is mainly exposed to credit risk with respect to its mortgage portfolio, bonds and deposits. NIBTT limits its exposure with respect to its bond portfolio by investing in only bonds issued by the Government of Trinidad and Tobago or institutions with high credit worthiness. In respect to the Mortgage portfolio, constant monitoring is also employed. The necessary contact with mortgagors is maintained to ensure that payments are received in a timely manner, where necessary mortgage re-scheduling is done, which considers the borrowers new financial position. In the event where recovery may seem doubtful, provisions are set aside to cover any potential losses.The carrying amount of loans and advances, investment securities, matured deposits and cash balances at banks represent the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:Loans and advances20182017$000$000Mortgage advancesGross amount49,97654,381ImpairedGross amount49,23651,746Allowance for impairment (49,236) (51,746) Neither past due nor impairedGross amount 7402,635NIBTT granted mortgages based on evaluations of the mortgagees financial situation, and reports monthly on the exposure of potential losses from mortgages.Investment securitiesThe amounts in relation to investment securities are neither past due nor impaired. As such, no provisions have been made against the amounts.NIBTT holds collateral to cover its credit risks associated with specific investment securities considered most at risk.64'