NTUC Income AR 2017

CORPORATE GOVERNANCE 3. Credit Risk Credit risk is the risk of default by borrowers and transactional counterparties, as well as, the loss of value of financial assets due to deterioration in credit quality of the obligors. The Credit Risk Management Policy puts in place a robust process where ratings are applied to credit exposures. Each credit is rated and assigned a limit which will be aggregated and monitored across different sources of credit risk. Limits are set according to our evaluation of the credit worthiness and risk appetite. 4. Operational Risk Operational Risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. Operational Risks are managed through: • Establishing and executing enterprise-wide risk management strategies for specific operational risks that could materially impact our ability to do business or impact our reputation; • Risk and Control Self-Assessment- Heads of Business Units are accountable for the day-to-day management of the operational risks inherent in their operations. They identify and assess key risks and controls, and design controls and action plans to manage operational risks as part of their overall portfolio of risk, and to achieve an effective internal controls environment; • Use of appropriate operational risk management tools, methodology and mitigation strategies to identify, measure and monitor key operational risk exposures; • Risk reviews by the Risk Management function on specific areas of concern to identify areas for improvements and to close gaps or weaknesses. In particular, there are policies, processes and controls in place: • to protect the Co-operative from risks associated with money laundering and terrorist financing, and these include regular monitoring and screening activities; • to protect our customers, our business and other related third parties from fraud risks; • tomanagecyber risks and technology risks relating todata loss/leakage, systemsecurity vulnerabilities, system breakdown and availability, privileged access misuse and technology obsolescence. 5. Reputation Risk Our business relies on our reputation and the trust our policyholders place in us for their financial security. We are committed to continue to earn this trust by reinforcing fair and ethical practices, supported by strong compliance and corporate governance structures and processes. The risk management framework ensures that risks are properly measured, managed and monitored. The framework is tailored to our organisation and business structure to ensure that it is relevant and effective. From time to time, we will review the framework to ensure that it remains so and that it does provide the safeguards and assurances that our business is soundly run. ANNUAL REPORT 2017 NTUC INCOME INSURANCE CO-OPERATIVE LIMITED 26