Risk-focused Organisational Culture
We are steadfast in maintaining the trust our stakeholders have placed in us. We do this through our focus on values-led decision making and behaviour, and ensuring a strong risk-focused organisational culture. Our comprehensive framework of policies, processes, methodologies and tools help us identify, measure, monitor and manage material risks and opportunities faced by the Group. Where applicable, employees’ key performance indicators also include risk control metrics.
Ongoing training is an essential part of our efforts to ensure a risk-focused organisation. The topics for our training courses include anti-money laundering, countering the financing of terrorism, assessing and addressing operational and security risks, business ethics, core ethics for financial advisers, Fair Dealing ethics, global fraud prevention, financial crime prevention, IT security and cyber risk awareness, regulations on short-selling, and the UK Bribery Act. Several of our training programmes are also available online. This provides our colleagues more flexibility to learn and to complete the courses.
In 2017, each colleague across the Group spent an average of 13.3 hours on training related to risk management. Our colleagues also participated in conferences, seminars and workshops to learn more about risk management industry trends and best practices. Some of the events included the Financial Crime Seminar by The Association of Banks in Singapore and the ASEAN Regulatory Summit by Thomson Reuters.
Management has oversight on environmental, social and governance (ESG) matters including climate change risks and opportunities which may impact our financing activities. Group Credit is responsible for ensuring that all ESG risks are adequately addressed and where necessary, borrowers or projects with high ESG risk will be escalated to the Group Credit Committee for further review and approval. Consistent with UOB’s overall risk management approach, ESG risks are managed through our three Lines of Defence control structure.
Our Responsible Financing Policy applies to all borrowing customers of Group Wholesale Banking. Under the policy framework, our account officers are required to conduct due diligence on all new and existing borrowers during the client onboarding process and annual credit review. Borrowers are assessed for material ESG risks and their track record in sustainable business practices. We have also implemented sector-specific Credit Acceptance Guidelines and have ESG checklists in place to help our account officers in identifying, assessing and reviewing ESG risks.
Our borrowers are classified based on the level of ESG risk inherent in their business operations. Those that fall within the following eight ESG-sensitive industries defined in The Association of Banks in Singapore’s (ABS) Responsible Financing Guidelines will be subject to enhanced due diligence with sector-specific guidelines.
We notify our borrowers of their need to adhere to our Responsible Financing Policy and seek their representation and warranties to ensure compliance, including with local ESG regulations in the countries in which they operate. We also encourage them to follow established industry standards, to obtain relevant certifications and to adopt best practices for proper water and waste management, the reduction of greenhouse gas emissions and the management of occupational health and safety risks. The policy references international standards and conventions such as the Roundtable on Sustainable Palm Oil, Forest Stewardship Council and the World Heritage Convention.
We engage with our borrowers proactively and continually and work with them to improve their ESG practices. In addition, we monitor our borrowers on an ongoing basis for any adverse ESG-related news. For example, borrowers with any known ESG-related incidents will trigger an immediate review with the ESG risks to be addressed and managed appropriately.
We require our borrowers to rectify any breaches of our policy within a reasonable timeframe with account officers responsible for monitoring their progress. However, if we deem our borrowers unable or unwilling to commit to managing the potential adverse impact of their operations, we may choose to review and to reassess the relationship.
Our Responsible Financing Policy also prohibits our financing of companies:
- with operations in UNESCO World Heritage Sites, RAMSAR Wetlands, forests of high conservation value or sites with critical natural habitat;
- without measures in place to manage or to mitigate the risk of air, soil and water pollution;
- involved in the exploitation of labour, including forced labour and child labour that violates the rights of local communities;
- involved in land clearance by open burning; and
- involved in animal cruelty and the trade of endangered species as defined by the Convention on International Trade in Endangered Species of Wild Fauna and Flora.
At UOB, regulatory compliance is a top priority. UOB is committed to complying with applicable laws and regulations in the countries and territories in which we operate. These include requirements relevant to the licensing and conduct of banking or financial businesses, as well as those aimed at preventing financial crimes such as money laundering, financing of terrorism, fraud, tax evasion, bribery and corruption and insider trading.
Group Compliance, an independent function reporting directly to the Group CEO, is responsible for identifying, assessing, monitoring and managing regulatory compliance risks. Group Compliance plays a vital role in promoting a strong compliance culture and ethical conduct across the Group through advisory, active engagement with internal stakeholders and training.
The function also assists Management and the Board in ensuring that the Group's activities are conducted in accordance with laws and regulations through periodic compliance reviews. It also provides regular updates on regulatory trends and developments to Management and the Board. Our Group Compliance function is aligned with the standards and guidance provided in the Basel Committee on Banking Supervision’s “Compliance and the Compliance Function in Banks” paper.
The UOB Group Compliance Charter establishes the basic principles and duties of the Group Compliance function, roles and responsibilities of the internal stakeholders, and the relationship between Group Compliance and its internal stakeholders. Our compliance programmes are also designed and implemented to comply with international standards such as the Volcker Rule, Foreign Account Tax Compliance Act (FATCA) and the Organisation for Economic Co-operation and Development (OECD)’s Common Reporting Standard (CRS).
Economic Value of Our Contributions
In the course of conducting our business, we create direct and indirect economic value for our stakeholders and contribute to the development of local economies.