CIMB-Principal has put in place a risk management framework with activities that include a comprehensive compliance framework that essentially works on self-assessment as well as systems for managing active risks in investment portfolios. This is to ensure that clients' mandates are carefully adhered to and not exposed to unnecessary risks associated with delegation of funds management.
The framework consists of the following:
Mr. Albert Tai
Tel: +603 2084 2000
Email:
albert.tai@cimb.com
Internal Audit Department CIMB-Principal utilises CIMB Bank Berhad's Internal Audit team to conduct periodic audit reviews on its operations.
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Internal Compliance Procedures CIMB-Principal has a Compliance Unit which is responsible for the company's compliance to all applicable requirements as required under the Capital Markets And Services Act 2007, related guidelines and other applicable laws.
Compliance is also responsible for the administration of the compliance manual and tabling of a compliance reports to the Board of Directors at each Board meeting and the Monthly Investment Panel meetings. The responsibilities include:
- Monitoring the investment management role of CIMB-Principal
- Ensuring compliance with investment restrictions, reporting requirements and valuation rules imposed by clients and regulators
- Monitoring dealings by employees to ensure compliance with the Rules of Business Conduct
- Reviewing each area within CIMB-Principal to ensure it meets all regulatory requirements and internal management operating standards/procedures
- Investigating any irregularities related to the above
CIMB-Principal has also developed a set of "Rules of Business Conduct" which applies to all employees that set forth CIMB-Principal's commitment to conduct its business lawfully with high credibility and integrity. The culture dictates that compliance is each employee's responsibility.
CIMB-Principal also has a Business Continuity Plan (BCP) that details CIMB-Principal's back-up plans for all key systems and proceeding of operations in the event of disaster.
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Risk Management Risk Management Structure CIMB-Principal's risk management comprises dedicated risk management and compliance teams, and members of the Investment Panel.
The team works in tandem with the investment team to ensure the level of risk meets the expectations of clients' overall performance targets that are set against the appropriate benchmark. Portfolios are constructed and managed within pre-determined guidelines such as risk budgets that will be monitored regularly by the Risk Management team.
- Risk management in equities portfolios
- Beta targets for the different types of risk tolerance levels
- Tracking error against the benchmark targets
- Stock and sector exposure bands
- Targeted number of stocks/bonds to achieve a well-diversified portfolio.
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- Performance attribution
- Risk attribution
- Risk exceptions
- Liquidity analysis
- Detailed risk reports
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- Risk management in fixed income portfolios
- Investment team
- Monitors the credit of companies in our portfolio and revise cash-flow projections, if necessary
- Any changes that may have significant impact on the company triggers a review of the status of the securities
- Investment committee
- Restricts single issuer limit to 10% of the market value of the portfolio
- Restricts issue size limit to 10%
- Consent to the sought from Chief Investment Officer to invest more than 10% in the respective limits
- Reviews and discusses the credits of the portfolio on at least a weekly basis
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We currently mark our portfolio to market by using bid rates of 3 financial institutions and conduct stress tests. The investment team and investment committee monitors and review the duration of the portfolio regularly based on the interest rate premise. |
We manage liquidity risk by actively managing the maturity structure of the portfolio. Factors such as issue size of the bond, issuers total debt outstanding and sector limits are also taken into consideration to mitigate liquidity risk.
The investment committee sets the portfolio's maturity bands, making changes where necessary and reviews the quality profile of the portfolio. |
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Investment Panel Members There are four members sitting on the Investment Panel. They meet once a month and are responsible for:
- Formulating, implementing and monitoring investment management policy guidelines to achieve the objectives of the various funds;
- Monitoring performances, asset allocations & compliance;
- Review market views/outlook.
Under CIMB-Principal's disciplined investment process, Islamic equity mandate portfolios follow the same process as those of the conventional equity portfolios except for an additional feature i.e. the selection of Islamic stocks is done through reference to the Securities Commission Syariah Advisory Council's list and CIMB-Principal's Syariah Advisory Committee.
The functions and responsibilities of the committee are:
- to ensure that the Islamic portfolio is managed and administered in accordance to Syariah principles;
- to provide expertise and guidance for the Islamic funds in all matters relating to Syariah principles, including fund structure and investment, and other operational and administrative matters;
- to consult the Securities Commission who may then consult their Syariah Advisory Council where there are ambiguities or uncertainties as to any investment, instrument, system procedures and / or processes;
- to ensure that the Syariah funds comply to any guidelines, rulings and decisions issued by the Securities Commission;
- to act with due care, skill and diligence in carrying out its duties and responsibilities.
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