Risk Management

The objective of risk management is to put in place effective policies, mechanisms, systems and processes for investments and operations to maximize the returns for its shareholder within acceptable risk tolerance. Risk management is a company-wide effort involving every business line, department and individual. It is embedded throughout the investment life cycle—from the overall portfolio to general asset classes and to specific investment strategies and sub strategies.


We have a comprehensive risk classification and management system, involving the Executive Committee, Risk Management Committee and relevant departments to manage all kinds of risks: market, credit, operational, liquidity, strategy, legal, reputational and country risks.

CIC's comprehensive risk management system comprises the following pillars:

  • Three-layered system: includes basic procedures, management approaches designated to different types of risks and risk management guidelines and provides institutional guarantees for scientific, well-defined and orderly risk management.
  • Three-tiered system: Company-wide, interdepartmental and department-wide management system; standardizes risk management in different aspects of operation, including investment, management and supervision, enhancing efficiency and standardization in risk management.
  • Three lines of defense:


    For the first line of defense, investment departments remain well informed of the risks associated with the investment products within their mandate and follow CIC's risk management rules in their investment activities.

    For the second line of defense, the Department of Risk Management sets risk limits for different asset classes based on the risk budget; formulates the risk management framework, mechanism and processes; works with the Department of Legal and Compliance, the Department of Public Relations and International Cooperation to monitor and manage risks across the board.

    For the third line of defense, the Department of Internal Audit and the Department of Institutional Integrity audit, supervise and evaluate company-wide risk management to ensure procedural compliance and effectiveness in risk management and internal controls, making recommendations to redress inadequacies when they may arise.

Capacity Building

During 2015, CIC proactively enhanced its overall capacity to prevent and manage risk by constantly making systemic improvements based on evolving business needs and reinforcing the risk management of asset allocations to make the overall risk level more manageable. CIC improved project valuation and the risk and performance attribution approach and independently developed related models. It integrated the risk factors into the Fengye System to improve quantitative risk analysis capabilities. It promptly alerted the managers of projects that triggered warnings and made sure a response was in place, resulting in a more sound risk early warning system and greater responsiveness. CIC carefully evaluated operational risks and took corrective measures against risks and unusual conditions in operations. CIC examined the due diligence on investment projects and the Investment Manager Accountability System and put forward improvement measures.


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