In 2018, Group Risk Management implemented several initiatives to strengthen our approach to managing the risks faced by the Group. In particular, we completed a review of the Bank’s technology risk capabilities, following which we established a dedicated Technology Risk Management (TRM) Division with governance and oversight of technology risk management across the Group. The team works closely with business and support units to oversee, to review and to strengthen their current practices in technology risk management. Since its inception, TRM has also enhanced the Group’s Technology Risk Appetite to encapsulate our strategic technology and cyber risk goals, which are tracked and measured through a technology risk dashboard.

We integrated our trading and capital reporting processes to enhance our regulatory reporting. We also deepened our market risk management capabilities in anticipation of new regulatory requirements that will take effect in 2022. Simultaneously, we started laying the groundwork to adopt more advanced market risk models in the future.

During the year, our Operational Risk Management Division implemented the Scenario Analysis programme, a forward-looking qualitative tool to facilitate the proactive identification and mitigation of risks and control gaps. We also completed the inaugural Scenario Analysis exercise with key stakeholders, tapping relevant business and risk-subject expertise for various plausible operational scenarios, including events that had occurred in the finance industry. Given the evolving risk landscape, the lessons we learn and the control gaps we identify continually help us to strengthen the Bank’s internal controls via our risk management programmes.

To facilitate liquidity risk management, we are implementing robotic process automation to improve the efficiency of our reporting processes.

Recognising the credit, operational and reputational risk implications of environmental, social and governance (ESG) issues, in 2018 we included ESG risk as one of our material risks. In this regard, we monitor and assess proactively the impact of a wide range of ESG issues on the Group. To manage better the relevant ESG risks in our wholesale lending portfolio, we enhanced our ESG risk classification of borrowers and our Responsible Financing Policy, including tightening our stance towards coal financing to help mitigate increasing climate-related risks*.