Risk Management

Objective and Approach

The objective of risk management is to put in place effective policies, mechanisms, systems, and processes for investment and operations to maximize the returns for the shareholder within an 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.


System and Mechanism

CIC has 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.


In line with policies set by the Board of Directors and the Executive Committee, the Risk Management Committee oversees CIC's risk management strategies and approaches. Its key responsibilities include the following: Reviewing risk management strategies, policies and procedures; Determining the risk budgeting and allocation plan; Reviewing risk management and assessment reports; Reviewing assessment standards, management schemes, and internal control mechanisms for major risk drivers and events as well as key business processes; Conducting periodic reviews of the risk profile of asset allocations and the execution of the allocated risk budgets; Reviewing the risk management strategy and contingency plans for major risk events; Reviewing other risk-related issues under the authorization of the Executive Committee.


The Risk Management Committee, which oversees the risks in CIC's investment and operation activities, is comprised of the Chairman and CEO, President, related Executive Vice Presidents, Chief Risk Officer, and the Heads of the Department of Risk Management, the Department of Law and Compliance, the Department of Public Relations and International Cooperation, the Department of Asset Allocation, the Department of Investment Operations, the Department of Finance and Accounting, the Department of Internal Audit, the General Office, and the Department of Research. Other members of senior management and the heads of the investment departments attend Risk Management Committee meetings as needed. The Operational Risk Management Committee and the Valuation Committee are two subcommittees established under the Risk Management Committee.


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

  • Three-layered system: includes basic procedures and management approaches designated according to different types of risks and risk management guidelines; provides institutional guarantees for scientific, well-defined, and orderly risk management.
  • Three-tiered system: a company-wide, inter-department, and intra-department management system; standardizes risk management across various operations, including investment, management, and supervision, thereby enhancing efficiency and standardization in operations and 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 on various asset classes based on the risk budget; formulates the risk management framework, mechanism and processes; works with the Department of Law and Compliance and the Department of Public Relations and International Cooperation to monitor and manage risks across the Committee.

    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 and make recommendations to redress inadequacies if these arise.

Management of Multiple Types of Risks

In 2016, CIC intensified its comprehensive risk management, improved its risk management system, and enhanced the identification and assessment of pre-investment risks and the monitoring and early warning of post-investment risks. A risk factor system was implemented as part of continuing efforts to buttress its factor model analytical framework and the various risk management tools. Existing Level II and Level III assets were promptly valuated using scientifically rigorous methods, and valuation models and past practices were reviewed and studied to facilitate standardizing asset valuations. Under the new management and asset allocation structure, we changed the format of the performance report and relied on a self-developed model to conduct regular attribution analysis of the overall portfolio, major asset categories and investment strategies. Recommendations were proposed for improving incidents concerning operational risks and other unusual events, and implementation of the recommended solutions was closely supervised and monitored.


CIC values the prevention and management of reputational risks, and has continued to do well in information disclosure and tracking public opinion to assess reputational risks. In selecting investment projects and partners, CIC always considers reputational risk as a major factor in decision-making. CIC also seeks to fulfill its corporate social responsibility and create a favorable image of a responsible corporate citizen and respectable partner.


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