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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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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Introduction

DBS Group was the holding company for Singapore based DBS Bank, and its banking subsidiaries in China, Indonesia, the Philippines, and Thailand. DBS Group also held a 20% stake in the Bank of the Philippine Islands, that country's second-largest bank¹.

After its 2001 acquisition of Dao Heng Bank, DBS Group entered the Hong Kong banking market with almost 100 branches. The Singapore government owned more than 35% of DBS Group. In its annual “Asia Risk Awards for Excellence 2002”, Asia Risk magazine had picked DBS' Oon Kum Loon and Chng Sok Hui for its “Risk Managers of the Year” award.

DBS was the first Asian bank to receive this award.

Overview of Risk Management

The DBS Board undertook a careful review of decision making within the Group at various levels. The Board engaged itself in strategic issues and actively participated in major decisions.

The review and approval of the consolidated financial statements, strategic plans and acquisitions; the annual budget; major fund-raising exercises of the Group; and all decisions that had a major impact on the business, reputation or standing of the Group were vetted by the Board.

DBS had put in place various policies and procedures to identify, mitigate and monitor risks across the firm. DBS emphasized constant communication, judgment, and knowledge of products, markets and controls by business and support units.

The Group believed that business and support units had the primary responsibility for managing risk.

At the same time, there was a need for independent risk management and oversight.

The building blocks of the group's risk management activities were comprehensive risk management processes, early identification systems, accurate risk measures, investments in people and technology to interpret and manage risk on a daily basis, stress tests and comprehensive process reviews done in conjunction with internal auditors, external auditors and regulatory officials.

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