Risk Management
Objectives and philosophy
Our risk management objective is to ensure that our investment activities operate in an orderly manner within acceptable risk limits and to maximise shareholders' equity by establishing effective risk management policies, systems, systems and processes.
We advocate a comprehensive risk management philosophy, with risk management activities covering all departments and positions, across all stages of pre-investment, investment and post-investment, at all levels of the total portfolio, asset classes and investment strategies/sub-strategies.
System and Mechanism
Since its establishment, the Company has gradually built up a comprehensive risk management system covering eleven types of risks, including market risk, credit risk, operational risk, liquidity risk, country risk, strategic risk, legal risk, reputation risk, geopolitical risk, information technology risk and integrity risk, and has continued to enrich the risk management tools and instruments for each level of the portfolio, starting from the total portfolio, each asset class and portfolio/project, to ensure that investment activities operate in an orderly manner within an acceptable risk range.
Main features
ASIA AURORA INVESTMENT CO., LIMITED has developed the following key features in the development of its risk management system.
3 institutional tiers
A sound risk system has laid a solid foundation to promote the formation of a good risk compliance culture in the company, and provides basic guidelines for daily risk management.
Basic system
Specific system
Operating system
3 asset tiers
In conjunction with the asset allocation framework, risk management guidelines are formulated for each asset tier to achieve layer-by-layer decomposition and implementation of risk limits and other indicators and full spectrum coverage.
Total portfolio
Various asset classes
Specific projects/portfolios
3 investment stages
Risk management adheres to the principles of independence and professionalism, providing comprehensive coverage of all major phases of business activities.
Pre-investment due diligence
Investment decisions
Post-investment management
Organisational system
The Company has established a new Risk Management Committee under the Board of Directors and a new Comprehensive Risk Management Committee under the Executive Committee (hereinafter referred to as the "Comprehensive Risk Management Committee"). At the decision-making level, the Committee performs risk management duties such as establishing and improving the Company's comprehensive risk management system, while the sub-committees under the Committee focus on risk prevention and control work such as overseas investment and domestic equity management.
At the implementation level, the company strictly enforces the "three lines of defence" and continues to consolidate a sound organisational system for risk management with clear boundaries of responsibility.
The "three lines of defence" mechanism
The first line of defence
Each department is the first responsible person for risk management in their respective business areas.
The second line of defence
The second line of defence, the risk management function, independently exercises its risk management responsibilities. The Risk Management Department leads the overall risk management of the Company and is responsible for establishing and improving policies, systems and processes related to the overall risk management of the Company in conjunction with the relevant functional management departments to carry out overall risk management.
The third line of defence
The Audit Department is responsible for checking and evaluating the effectiveness of the risk management system and playing a supervisory role in risk management.