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Risk Management Policies

Risk Management Policies
The objective of risk management is to balance the risks and the returns of different business entities with the goal of maximizing shareholder value. Accordingly, the Risk Management department's organizational structure and management methodologies have been built to reflect CDF's overall business and management practices.

Organizational Structure
The board would set the objectives and determines the acceptable level of risks in order for the Risk Management department to allocate risk capital and to establish the appropriate risk tolerance levels for different business units. Duties of Risk Management department include identifying, evaluating and quantifying risks while that for business departments would include preventing and remedying such risks.

Methods of Risk Evaluation
CDF has developed systematic techniques to measure different types of risks and to estimate the potential losses in consideration of positions taken and the associated correlations among them.

Control of Exposure Limits
Exposure limits were set for different types of businesses according to the relevant regulations and internal risk diversification requirements that have been set out as part of the best businesses practices.

Risk Management Reporting
CDF and its subsidiaries are required to regularly and periodically report on business risks and control status in accordance to relevant banking regulations.

Independent Supervision
CDF maintains the principle of keeping the risk management department wholly separate from and independent of the business departments that undertake the risks. Related functions, such as internal audit and legal, are also included in the risk management mechanism and carried out independently.