IIF Risk Management Framework
Effective risk management is of primary importance to the success of any financial institution, i.e. achieving the balance among aspects of Return – Risk – Capital. This risk management objective can be achieved through the implementation of sound risk management framework, which comprise of:
- Comprehensive risk management policies for major risks faced by IIF;
- Appropriate organizational structure with clear definition of roles and responsibilities at various levels;
- Adequate risk management processes (including risk management methodologies and risk mitigation approaches), risk monitoring and control processes;
- Supporting infrastructure in terms of IT systems and resources.
At IIF, a comprehensive risk management structure has been established to measure, monitor, and manage the principal risks faced while conducting its day-to-day operations. These risks include credit risk, market & liquidity risk, operational risk, and social & environmental risk.
All policies and procedures in IIF are in a form of risk management inherent in every operational activities. Procedures are developed with clear definition of roles and responsibilities at various levels involved, with the four-eye principle in place, evaluated and updated at least once every two years.
Risk Management Process
IIF strives to sustainably adjust its Enterprise Risk Management (ERM) as part of its strategic plans to maintain its asset quality and operations as well as business pillars against risk potential. In its implementation, our investment activities are safeguarded by multiple lines of defense. The first line of defense is the risks taking units. The Risk Management Directorate is the second line of defense that will check, verify and provide independent views to the management with regards to the proposal from risk taking units as well as monitor the investment portfolio together with the Finance and Operations Directorate. The relevant committees of the BoD and BoC are the third line of defense. The fourth and final line of defense is the Internal Audit team, which will verify to ensure all of the Institution’s standardized procedures have been met.
Within the ERM framework, the Risk Management Committee (RMC) of the BoD is responsible for monitoring and management of the overall enterprise risk profiles, with the Risk Oversight Committee (ROC) of the BoC acts as an oversight function.