03 / OUR VALUE CREATION APPROACH 01 02 04 05 06 07 08 09 29 KEY RISKS, MITIGATION AND OPPORTUNITIES The risk of deterioration in the value of financial instruments due to adverse movements in market factors such as interest rates, credit spreads, equity prices, foreign exchange rates and their associated volatilities. Heightened uncertainty and evolving global financial market pose significant challenges to achieving strategic objectives in market risk management. Key factors contributing to this complexity include geopolitical tensions, increased interest rate volatility, sustained inflationary pressures, intense market competition, the rise of unilateralism and the shifting dynamics of the global order. Mitigation Measures • A robust market risk governance structure and strong management oversight in line with best practices for managing market-related exposures. This includes enhanced review and oversight of business strategies, new product initiatives, operating processes and market risk limits to proactively identify and address emerging global market risks. • Established risk-reward driven market risk framework and policy, coupled with sustainable model and analytical-based methodology ensure that market risk-taking activities are aligned with risk-reward principles and overall risk appetite framework. • Carefully designed risk-based product-mix that promotes sustainable trading and investment income. A robust and improved evaluation process regularly assesses the relevance of underlying assets used in trading and product structuring, ensuring alignment with shifting market dynamics. • Continuous market risk exposures monitoring through dashboards and early warning indicators of limits, volatility and concentration risks. Periodic reviews and recalibration of market risk limits to reflect prevailing market conditions. • Diversified asset classes and cross product trading and investment strategies that optimise returns relative to the risk assumed. Trading strategies with stable margins are prioritised over high-risk proprietary trading to enhance portfolio resilience and reduce volatility. • Conduct stress testing and refine input parameters in periodic assessments to better evaluate the impact of extreme market conditions on trading and investment performance. • Bolster effective monitoring and responsiveness to structural, regulatory and competitive market shifts. Opportunities • Notwithstanding the challenges posed by the key market factors, significant opportunities arise to enhance the Group’s market position and drive sustainable growth. Supported by the aforementioned mitigation measures, the Group is wellpositioned to seize opportunities driven by evolving trading, investment and hedging requirements among customers and counterparties. • Cultivate a culture that emphasises the development of financial market products designed to meet the evolving needs of customers while ensuring the timely evaluation and mitigation of emerging risks. • Prioritise efficient capital deployment to support strategic growth initiatives, enabling management to optimise risk limits and balance business expansion with prudent risk management practices. Through these proactive and adaptive mitigation strategies, the Group reinforces its reputation as a forward-thinking, agile institution, capable of navigating market uncertainties and capitalising on opportunities in an increasingly dynamic financial landscape. Our Approach As part of its core financial activities, risk-taking is permitted for trading and investment in key permissible markets e.g. interest rates, foreign exchange and equities, as well as their respective derivatives markets. These activities are guided by the prescribed risk limits defined in the market risk limit framework. Impact to Kenanga Market risk poses the potential for financial losses, which impacts financial earnings, performance and capital. R2 Market Risk
RkJQdWJsaXNoZXIy NDgzMzc=