Enterprise Risk Management at DBS Group

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Case Details:

Case Code : ERMT-026
Case Length : 14 Pages
Period : 2003
Pub Date : 2003
Teaching Note :Not Available
Organization : Statoil
Industry : Oil and Energy
Countries : Norway

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Market Risk

Trading
Trading market risk arose from changes in market rates such as interest rates, foreign exchange rates and equity prices, as well as in their correlation and implied volatilities. DBS was exposed to trading market risk in the course of undertaking both proprietary and client related transactions. DBS had established limits to ensure that operations took place within the aggregate risk and concentration parameters set by senior management. DBS had adopted a Daily Earnings at Risk (DEaR) methodology to estimate the group's trading market risk with a 99% level of confidence over a one-day horizon...

Liquidity Risk

Liquidity obligations arose from withdrawals of deposits, repayments of purchased funds at maturity and extensions of credit and working capital needs. DBS sought to manage its liquidity risk across all classes of assets and liabilities to ensure that even under adverse conditions, funds could be accessed at a reasonable cost...

Operational Risk

Operational risk was the risk of loss arising from inadequate or failed internal processes, people or systems, or from external events.

Key elements of DBS's Operational Risk Management Framework included risk and control self-assessment, risk event management, key risk indicators reporting, process risk mapping, risk analysis and reporting, Global Insurance Program and Business Continuity Planning Program...

Reputation Risk

DBS believed reputation for integrity and trust was critical in the banking business. It emphasized the need to build a reputation for integrity and trust every day by demonstrating good judgment, applying high ethical standards to its work, and by acting within the spirit and letter of regulations governing its business, as well as within its own code of conduct, policies and rules...

Exhibits

Exhibit I: DBS Group: Loan and Investment Exposures to Malaysia, Indonesia, Thailand, Korea, The Philippines (Regional Countries), Hong Kong and China.
Exhibit II: DBS Group: Use of Financial Derivatives
Exhibit III: DBS Group: Daily Earnings at Risk
Exhibit IV: DBS Group: Capital & Risk Weighted assets