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Risk Management System

What is Risk?

Risk is the probability of something happening that have negative effects such as losses or deviation from expected earnings due to degree of future uncertainty.

Types of Risks

Credit Risk
The probability of economic losses incurred as a result of borrower’s failure to repay a loan or meet contractual obligations
Market Risk
The probability of losses incurred as a result of volatility of market factors, including interest rate, stock market, exchange rate, products
Liquidity Risk
Inability to meet debt obligation or any unexpected losses incurred as a result of Asset-Liability Mismatch or Drastic Outflow of Fund
Legal Risk
The risk of not complying and violation of laws or regulations that will materially impact the business
Operation Risk
The probability of losses incurred from breakdowns in internal procedures, people, systems or any external forces
Reputation Risk
An economic threat or danger where poor management, financial incident or public criticism affect negative publicity and public perception of a corporation
Strategic Risk
The risks associated with judgmental errors in business management, errors and trials in business strategy and failure to adjust new financial environment

Risk Management Organization

Risk Management Officer
  • ·Perform risk management tasks independently, professionally and comprehensively based on expertise
Risk Management Working Committee
  • ·Chairman : CEO
  • ·Member of the committees
    • - Collective Investment Property: Risk Management Officer, Heads of Investment Division and Compliance Officer
    • - Proprietary Account: Risk Management Officer, Head of Management Support Team and Compliance Officer
Board of Directors
  • ·Supervise risk management of collective investment property along with authority and responsibility
  • ·Rights of board of directors
    • - Enact, revise and abolish risk management regulation
    • - Any designated matters that need board resolution based on company regulations, including related law and risk management regulation
    • - Any matters deemed to be taken care by board resolution from Risk Management Working Committee

Risk Management FLOW

Pre-Risk Management
  • ·Pre-examine potential risk during product development stage
    • - Define Risk Factors
    • - Simulation
    • - Risk Limit Setting
  • ·Prepare risk management process
  • ·Notify risks and investment approach, such as clauses, rules, proposals and guidelines
On-going Risk Management
  • ·Monitoring
    • - Preliminary Risk Limits
    • - Market Risk Index
    • - Investment Performance Analysis and etc.
  • ·Monitor Trading
    • - Prescreen unfair trading via analysis on pre-trading reports and supervision on post-trading records
  • ·Crackdown on violation
    • - In case of violation, a notice is given to the person in charge from relevant division
    • - Explanatory Letter and Follow-up Measures
Post-Risk Management
  • ·Risk Management Working Committee
    • - Determine general policy for the risk management of collective investment property
    • - Establish and alter the risk levels that collective investment vehicle can embrace
    • - Risk Evaluation and Approval of collective investment vehicle set-up
    • - Determine delayed redemption of collective investment securities
  • · Improve Management Process
  • · Periodic Internal Audit
  • · Submit significant matter of violation to Personnel Committee