Handling financial risk management in Singapore

For individuals who intend to provide financial services in Singapore, it is worth taking into account that this industry requires fulfillment of numerous standards there. Especially, advanced financial risk management methods are implemented extensively. Usage of experienced risk management techniques allows to minimize financial loss and to keep profits high no matter how critical the situation gets. That is why advanced risk management is highly valued in Singapore’s financial market. We will now discuss what risks the business environment contains and find out what methods help conquer them.

Risk management in Singapore

Firstly, it is crucial to identify and measure risks in order to deal with them successfully. Mainly, the type of activity and the environment define the set of natural risks for each organization. Prior to managing risks, they must be identified and analyzed.

High-risk areas can be defined as:

• Internal – reliability of managing and financial reporting, company’s efficiency, and safety;
• External – volatile market prices including exchange and interest rates, the value of shares, credit spreads.

For the successful start of financial business in Singapore it is important to conform to the formed high standards:  not only set up a high-quality technology risk management but also ensure the protection of customer data, transactions, and the system itself by initiating a strong authentication.

Rules for corporate governance

Singapore-listed banks must follow the banking corporate governing rules. Approved exchanges, clearing centers, and holding partners are obliged to comply with corporate governance designed distinctively for them – Regulation on Securities and Futures.

Audit in risk management

Registration of a financial firm in Singapore inquires an attentive approach to internal audit. These are the key abilities required from internal auditors:

• Usage of a methodology allowing the identification of the significant risks the firm can encounter;
• Preparation of an audit plan, its regular reviewal on the basis of risk assessment, audit resources allocation according to the plan;
• Verification of adequate division of tasks and reporting mechanisms for the front office and the risk management team.

Directors’ duties

It is useful to know that the list of duties for directors of Singapore-registered companies is dictated by the Companies Act and the principles of the common law. The list consists of the following responsibilities:

• Conflicts of interest must be avoided;
• Directors must act in the interest of the company;
• Directors are expected to act within the appropriate objectives;
• Potential conflicts have to be disclosed;
• Directors are not supposed to use the information obtained by virtue of their position in an inappropriate way (personal gain, to cause damage to a particular person or the company).

Professionals at COREDO are here for your questions and requests about additional information on opening a financial services company in Singapore. Do not hesitate to contact us even if you are interested in another kind of business opening in this jurisdiction.