Risk management

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Risk management

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Risk management process

Pre-management : clearly sets and operates the investment guideline, risk control regulations and internal control standards.
Interim management : operates the strict all-time monitoring system
Post management : active feedback and removal of risk factors

  • Pre-management

    Investment guideline
    Stock: beta tolerance, stock universe
    Bonds: duration tolerance

    Control system of credit risk
    Credit rating limit, limit control

  • Interim management

    Risk monitoring
    Stock: limit in the input of the stop-loss ratio and others
    Bonds: checking the duration and control of credit score
    Stock, Credit Universe Adjustment in stock and credit universe

    Daily checking of compliance

  • Post management

    Process for removal of risks
    Clearing the process such as scope of removal for each stage in case of excess or duration
    Systematic report: team leader -> head office -> RM committee

    Follow-up compliance
    How to remove the violations

Risk management system

Risk management committee : Company-wide risk management/ decision on the risk factors/ establishment of risk management policy/ decision on the allowance limit of risk

Compliance System
  • Daily check to ensure the compliance with the laws, terms and conditions and regulations
  • Monitoring the sales trend at all times
Compliance team
  • Implementing the demonstrative risk management
  • Setting the risk limit for each fund
  • Preparing the method for risk management
  • Checking whether the regulation is complied with
  • Monitoring at all times for the protection of customer's benefits
  • Measuring the performance in consideration of risk
System
  • Sensitivity analysis
    (Beta, Duration, Convexity)
  • VAR measuring and limit control
  • Performance evaluation (Sharp, Trainer)
Management team
  • Self risk management inside the management team
  • Organization of portfolio and establishment of investment strategy
  • Correction of regulation violations
  • Operation of risk management means such as calculation of hedge ratio

Control for each risk management elemen

Valuation risk
Risk which can occur due to the error in the valuation of investment target
  • - Use of self valuation model
  • - Application of valuation which is proper for each investment among many valuation methods
  • - Prediction of valuation changes according to the scenario (change in the management conditions)
  • - Immediate change in valuation when the conditions are changed
Legal risk
Risk which can occur during the contracting process and risk which can occur in executing the investment and follow-up management
  • - Review of all problems prior to internal lawyers making the investment.
  • - Checking all legal matters from the stage of preparing a written agreement by appointing a law firm
Operation risk
System risk, risk of employee's seizure/embezzlement, and when the risk occurs in the assets out of book
  • - Periodic check of internal system and model
  • - Continuous operation of proper compensation system for the staff and morale enhancement program
  • - Lawyer's checking of all problems prior to investment to prevent any moral hazard
  • - Checking the legal issues by appointing an outside law firm starting on the stage of making contract
  • - Execution of 3 principles to prevent the moral hazard
    1. ① All things shall be recorded
    2. ② All things shall be conducted by dual persons independently.
    3. ③ The execution process shall be controlled through check and balance.
Market risk
Risk from change in interest rate, relative revenue ratio and the market valuation
  • - Establishing the contingency plan in case of the rapid decline of corporate value
  • - Strengthening the verification of valuation model which changes according to the market situation
  • - Construction of early warning system
Risk of decline
in the fund profit
In case when the profit gets lowered due to the market and other external impacts
  • - Responding with early warning system and contingency plan
  • - Decision on the response level such as dispatch of DFO, outside director or our staff
  • - Controlling and reporting on the cash flow and cash burn rate when the investment company is exposed to the liquidity crisis or bankruptcy risk
Concentration risk
Risk of concentration of the scope of portfolio and the tradin
  • - Consider the risk diversification in case of investment concentrated on the specific scope
  • - Consider the risk diversification by increasing the number of trading entities
Investment risk
Risk which can occur in case of non compliance with regulations
  • - Preparation of checklist proper for each fund when establishing the rules and regulations and monitoring to ensure its compliance
  • - Monitoring to ensure the compliance with management strategy

GOLDE BRIDGE ASSET MANAGEMENTCopyright ⓒ 2016 GOLDEN BRIDGE ASSET MANAGEMENT Co., Ltd. All Right Reserved.

As for the collective investment instruments, the profit or loss generated from the management is attributed to the investors.
Please fully read the investment target, refund method and fee specified in the investment manual prior to joining the fund.
The performance in the past does not guarantee the profit in the future.
Please keep in mind that the investment in the foreign investment instruments denominated in foreign currency may have the losses even due to the fluctuation of exchange rate.