Risk Management Overview
“Mission Statement: Increasing enterprise value through the careful understanding and management of risk.”
The assumption of financial and non-financial risks is an integral part of the Group’s business. UOB’s risk management strategy is targeted at ensuring on-going effective risk discovery and achieving effective capital management. Risks are managed within levels established by the management committees, and approved by the Board of Directors (the “Board”) and its committees. A comprehensive framework of measurement, monitoring and control policies and procedures are established to enhance the Bank’s discovery and management of such risks. This framework and its antecedent processes are reviewed by the Executive Committee (“EXCO”) of the Board.
UOB applies the following risk management principles:
- Promotion of sustainable long-term growth through embracing sound risk management principles and business practices;
- Continual improvement of risk discovery capabilities and establishment of appropriate value-creating risk controls;
- Focus on facilitating business development within a prudent, consistent and efficient risk management framework that balances risks and returns
The Risk Management function is independent of the business units it monitors. Several divisions within Risk Management Sector contribute to the independent management of risk.
The Balance Sheet Risk Management Division(“BSRM”) establishes and facilitates an integrated approach to monitor and manage the interest rate risk in the banking book and liquidity risk of the Group. BSRM implements and communicates a consistent liquidity and interest rate management framework, which includes policies, limits and reports, for the Group. It performs independent interest rate and liquidity risk analyses which are discussed at the Interest Rate Working Group where asset and liability management tactical strategies are formulated. These tactical strategies are then recommended to the Asset & Liability Committee (“ALCO”) for their approval.
The Credit and Country Risk Management Division(“CCRM”) provides independent oversight of credit risks and is responsible for the reporting and analysis of all elements of credit risk. CCRM develops Group-wide credit policies and guidelines for all credit-related activities. It actively engages business units on credit-related matters, focusing on facilitating business development within a prudent, consistent and efficient credit risk management framework. It aims to achieve value creation through congruent credit risk methodologies and consistent credit policies and processes across the Group. In addition, CCRM provides independent oversight for the Group’s Basel II Internal Ratings-Based Approach (“IRBA”) implementation and credit risk capital management.
The Market Risk Management Division(“MRM”) is responsible for the independent oversight of market risks. The key accountability of MRM includes the development, implementation, maintenance, enhancement, and communication of a consistent market risk framework. Apart from the responsibility of providing a timely assessment of the overall market risk profile, the division also participates in the development and implementation of an infrastructure that will support the use of internal models for regulatory capital and economic capital computations.
The Operational Risk Management Division(“ORM”) develops and maintains the Group’s operational risk management framework, policies, processes and procedures, and supports the business units in their implementation. ORM also monitors and submits regular operational risk reports to the Operational Risk & Compliance Committee, EXCO and the Board.