• IEI-Anchor complies with all regulatory provisions and requirements for the management of market and counterparty risks. Where there are differences between the company’s policies and regulatory provisions/ requirements, the latter shall take precedence.

• All material market and counterparty risks that the company is exposed to in the course of its investment/trading business are identified, measured, and managed using appropriate policies and controls to protect the company from losses arising from the crystallization of these risks. Material risk for the purpose of this policy is any risk (either market or counterparty) that could result in a financial loss either directly or indirectly irrespective of the size of the loss.

• The Risk Management Committee (RMC) on behalf of the Board of Directors maintains oversight over the risk management process and ensures that IEI-Anchor’s risk exposure is within tolerable risk limits.

• The RMC in conjunction with the Board is responsible for determining IEI-Anchor’s risk appetite.

• All trading activities are governed by defined risk limits. The RMC is responsible for setting risk limits on counterparties, exposures, specific traded products/instruments and geographies.

• IEI-Anchor relies on internal and/or external risk ratings in controlling exposures to counterparties and financial instruments. Whilst the company appreciates that an issue (financial instrument) could have a better risk rating than an issuer (counterparty) through credit enhancement, the company WILL NOT INVEST in that issue if the corresponding counterparty risk rating is worse than the minimum counterparty risk rating.

• The RMC establishes and enforces other operating limits and practices that maintain exposures within levels consistent with internal policies.

• Executive Management ensures that appropriate policies and procedures are established to control and limit the company’s risk exposure in line with the defined risk appetite.

Executive Management also ensures that there is adequate separation of duties and reporting hierarchy between the investment/trading function, the operations and risk management functions

Risk Strategy

• Risk Appetite: The risk appetite is determined at the Board of Directors and RMC level. The goals of the risk appetite process are to define:

1. IEI-Anchor’s risk philosophy in terms of whether the company is a loss minimiser (risk averse) or a revenue maximizer (risk aggressive)

2. IEI-Anchor’s Value at Risk (VaR) figure for market risks

3. IEI-Anchor’s Risk Acceptance Criteria for counterparty risks

• Risk Policies: The risk policy documents the company’s view of acceptable levels of exposure to different types of risks, investment markets and counterparties. It details the guidelines and procedures for measuring, monitoring and managing market and counterparty risks, and the roles and responsibilities of stakeholders in the risk management process. It is used by the Risk Management Department to ensure that all risk management and related activities carried out within IEI-Anchor are done according to a set of documented guidelines.

Risk Assessment

• Risk Identification: This process requires brainstorming on risk areas, vulnerabilities and threats with the aim of determining the market and counterparty risks faced by IEI-Anchor Pension Managers Limited.
• Risk Analysis/Measurement: The Risk Management department measures the company’s exposure to identified risks (market & counterparty) using best practice standards. The department uses Value at Risk (VaR) models to measure market risks faced by the company and risk rating models (internal and/or external) to measure counterparty risks.

Risk Management

1. Risk Limits and Controls: The employees involved in trading and risk management understand the risks faced by IEI-Anchor as new risks appear as the market develops. This enables the RMC create implementable risk limits that may be applied on portfolios, instruments, counterparties and geographies. Risk control deals with the escalation process when limits are broken.

IEI-Anchor has an adequate system of internal controls over its risk management process to ensure compliance with risk management policies and procedures. Specific risk limits and controls are recommended by the Risk Management Lead and approved by the Risk Management Committee of the Board subject to the ratification of the Board of Directors. The risk limits and controls are documented in the risk policy manual and communicated to all stakeholders as required.

• Monitor Risks: This process involves monitoring IEI-Anchor’s exposures in relation to approved exposure and risk limits. The Risk Management Lead monitors the company’s exposures and escalates non-compliance with approved limits to the appropriate parties (Head, Management & Control, Risk Management Committee (RMC), Internal Control Lead and Legal Adviser & Chief Compliance Officer).
• Produce Risk Reports: This involves the production of risk reports that show the current risk limits and their utilization. These reports are sent to the RMC and the Board who may use it to initiate a review of the risk appetite and operating practices.
• Re-assess Risk Exposure: Analyzing IEI-Anchor’s current risk status becomes more important as the company’s operations expand and as new risks are identified. When a new risk exposure is identified, the RMC begins another iteration of the risk assessment process.