NTUC Income AR 2019

CORPORATE GOVERNANCE Under the risk management framework, risks are classified under five broad categories which are considered to be most central to the business: 1. Market Risk Market risk is the risk to the Co-operative’s financial condition arising from adverse movements in the level or volatility of asset market prices and long-term investment performance. This risk is managed through the confluence of investment and liability management strategies (including bonus strategy for participating business). 2. Insurance Risk Insurance risk refers to the uncertainty of claim payment upon a contingent, uncontrollable event, in return for a premium. The assumption of insurance risk to earn an economic profit is our core business. This risk is managed through the combination of underwriting and pricing. The Insurance Risk Policy sets out the types of risks that are acceptable to the Co-operative, the limits of retention and how new risks are to be evaluated and approved. 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 the 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 the ability to do business or impact reputation. • Risk and Control Self-Assessment Heads of Business Units and/or appointed Risk Champions and Representatives 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, to achieve an effective internal control 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. 30 HERE FOR SURE