This is a challenging but exciting period for Asia Pacific financial institutions. The prospects are excellent for those that make the right decisions relating to business development and risk management. Equally, however, in an increasingly competitive and internationalised operating environment, those that are less successful in their decision-making will struggle to make the most of the great opportunities open to them.

INTRODUCTION
The operating environment for Asia Pacific financial institutions is becoming increasingly competitive and complex. A necessary response is for institutions to upgrade their risk management in line with internationally-accepted practices, and many have already embarked on ambitious projects to enhance their risk management in multiple areas. Others are still thinking through how best to prioritise the changes needed and how best to deploy their scarce risk management resources.

A key factor that has put risk management in sharper focus is the gradual introduction of the Basel II capital adequacy framework across the region. Basel II offers a range of approaches of differing levels of sophistication in relation to the key risks — credit risk, market risk and operational risk — while at the same time increasing considerably the range of risks that institutions are expected to consider. It also introduces a requirement for an internal capital adequacy assessment process. These features require careful consideration by institutions.

At the same time, other factors are impacting on institutions’ risk management development, including the need to learn the lessons from the US sub-prime crisis and the resultant market turmoil and to upgrade liquidity risk management accordingly.

Institutions face a considerable task in determining how best to approach these issues and develop an appropriate strategy for risk management. ...

Download Risk Management Priorities for Asia Pacific Financial Institutions: Basel II and Beyond

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Contents
Introduction 3
Risk management priorities for Asia Pacific financial institutions : Basel II and beyond 5
Leveraging Basel II scoring models and data to improve credit processes 16
Stress-testing in the context of capital adequacy assessment and economic capital 22
Outlook beyond Basel II: The new risk management agenda 30
About KPMG 40

About KPMG

Overview

KPMG is a global network of professional firms providing audit, tax, and advisory services, with an industry focus. The aim of KPMG member firms is to turn knowledge into value for the benefit of the firms' clients, people, and the capital markets. With more than 123,000 people worldwide, member firms provide audit, tax, and advisory services in 145 countries.

About KPMG China

KPMG China has eleven offices (including KPMG Advisory (China) Limited) in Beijing, Shenyang, Qingdao, Shanghai, Chengdu, Hangzhou, Fuzhou, Guangzhou, Shenzhen, Hong Kong and Macau, with more than 7,000 professionals.

In 1992, KPMG became the first international accounting firm to be granted a joint venture licence in China, and our Hong Kong SAR operations have been established for over 60 years since 1945. This early commitment to the China market, together with our unwavering focus on quality, has been the foundation for accumulated industry experience, and is reflected in our appointment by some of the China's most prestigious companies.

As China businesses join the global economy and international companies seek to enter the China market, KPMG's blend of international experience and local knowledge makes us well-positioned to serve our clients in this increasingly complex, but exciting market.

Our single management structure for all our China offices allows efficient and rapid allocation of experienced professionals wherever the client is located in China. The flexibility of this single structure allows us to effectively serve companies across China - and we have many projects where professionals from different offices work together on a project under the supervision of a single nominated client partner, who has operational control of all resources.

Our business in China has established industry groups, enabling targeted, industry-specific experience and solutions to be delivered where needed. For our clients, this focus on industry and country specific knowledge means we can deliver exceptional people with an intimate knowledge of your specific business issues, as well as an overriding commitment to strive for the highest quality services.

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