The Financial and Operational Risk Management within CIMB Group

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ACKNOWLEDGEMENT

I would like to take this chance for thanking my research facilitator, friends & family for support they provided & their belief in me as well as guidance they provided without which I would have never been able to do this research.



DECLARATION

I, (Your name), would like to declare that all contents included in this thesis/dissertation stand for my individual work without any aid, & this thesis/dissertation has not been submitted for any examination at academic as well as professional level previously. It is also representing my very own views & not essentially which are associated with university.

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Table of Contents

ACKNOWLEDGEMENTII

DECLARATIONIII

CHAPTER01: PROJECT OBJECTIVES AND OVERALL RESEARCH APPROACH1

Background of the Study1

Risk Management2

Risk Management at CIMB Group2

Aim and objective of the study3

Rational of the Chosen Topic3

Outline of the study4

CHAPTER 02: INFORMATION GATHERING5

Research Methods5

Qualitative Research Method5

Quantitative Research Method6

Research Design7

Rationale for Chosen Research Design7

Justification of Secondary Research Method8

Ethical Considerations9

CHAPTR 03: RESULTS, ANALYSIS AND CONCLUSOINS10

Capital Structure and Adequacy10

Disclosure for Portfolios under the IRB Approach12

Retail Exposures13

PD, LGD and EAD Segmentation Models14

PD Segmentation Model14

PD Calibration for Retail Exposure15

LGD Segmentation Model15

EAD Segmentation Model17

Non Retail Exposures18

Credit Risk Mitigation19

Treatment of Rating Downgrade21

Securitisation21

CIMB's Involvement in Securitisation in 201022

ECAIs Used For Securitisation Process22

Management of Market Risk23

Capital Treatment for Market Risk25

Management of Operational Risk25

IRRBB Framework27

Measurement of IRRBB28

Earnings Perspective28

Economic Value Perspective29

REFERENCES30

APPENDIX33

List of Abbreviations33

CHAPTER01: PROJECT OBJECTIVES AND OVERALL RESEARCH APPROACH

Background of the Study

Risks are every time in the business and their consequences can affect the business any time. All this could have been avoided or at least limited their impact. But the most serious is that if no experience is gained from these disasters, while others will occur in the same industries and for similar reasons. Strong liberalization has led to significant volatility in banking and new threats to the banks and financial institutions. This instability of the banking system was manifested by recent economic crisis. The phenomenon is the new prudential challenge embark credit institutions to the extent it is necessary to exchange processes. Indeed, in its financial intermediation activity and to ensure financial security and a proper allocation of resources, the bank must include in its strategic priorities control the risks it faces and that by adopting a policy for managing of risk.

Thus, the economic and financial environment has become increasingly a source of risk, even dangerous for the banks, but they can also die of the risks they took. Because of these changes, banks have raised unique challenges in order to acquire competitive advantage. The bank, in fact, looks more and more like a machine at risk; it takes risks, and incorporates the changes to the service and banking products it offers. Given that operational risk is a significant risk to the banking business, although it is sometimes difficult to understand and quantify it can cause significant losses or even bankruptcy. The difficulties are not only the nature of the risks taken; they mostly are not in fact a new nature (credit risk, market risk, credit risk, liquidity). This study aims to analyze the ...