Risk Management

Managing risk is an integral part of our business strategy. Our risk management approach focuses on ensuring continued financial soundness and safeguarding the interests of our stakeholders, while remaining nimble to seize value-creating business opportunities in a fast-changing environment. We are committed to maintaining high standards of corporate governance, sound risk management principles and business practices to achieve sustainable long-term growth. We continuously strive towards best risk management practices to support our strategic objectives.

2015 Highlights

Ensuring sustainable growth through informed risk decision-making processes

In 2015, we rolled out an integrated managerial stress-testing framework which links the assessment of profitability, capital, liquidity and funding requirements. This complements our existing regulatory stress-testing and enables us to evaluate holistically the sensitivity of business plans to macroeconomic conditions and management decisions.

We also implemented a new counterparty credit risk system which significantly enhanced our capabilities in measuring and managing counterparty credit risk exposure for foreign exchange and derivatives.

Our integrated Governance, Risk and Compliance (GRC) system was also launched during the year as a tool for the Compliance, Operational Risk and Audit functions to sharpen risk management oversight of the Group’s businesses across the markets in which we operate. The integration of key activities and synchronisation of information enhance our decision-making process across these three functions. This in turn improves our business agility and competitive advantage and allows us to offer differentiated products to our customers.

Meeting new regulatory requirements and expectations

In line with the new regulatory requirement introduced by the Basel Committee on Banking Supervision to promote short-term resilience of the liquidity risk profile of banks, we commenced daily reporting and regulatory compliance for the Group’s Liquidity Coverage Ratio (LCR) in January 2015. To date the Group is well-funded and has more than adequate buffer above the regulatory requirements.

As a leading bank in Asia, we also recognise our role in driving responsible and sustainable business practices to ensure long-term financial stability. To this end, we have embarked on integrating environmental, social and governance (ESG) considerations into our risk assessment and credit decision processes.