HSBC 2012 Annual Report Download - page 275

273
Overview Operating & Financial Review Corporate Governance Financial Statements Shareholder Information
Fiduciary risk
(Unaudited)
Business activities in which fiduciary risk is inherent should only be undertaken within designated lines of business.
Fiduciary risk is managed within the designated businesses via a comprehensive policy framework and monitoring of
key indicators. The Group’s principal fiduciary businesses (‘designated businesses’) are:
• HSBC Securities Services, where it is exposed to fiduciary risk via its Securities Services and Corporate Trust
activities;
• HSBC Asset Management, which is exposed to fiduciary risks via its investment activities on behalf of clients;
• HSBC Private Banking, which is exposed to fiduciary risks via its Private Wealth Services division and
discretionary investment management; and
• HSBC Insurance, which is exposed to fiduciary risks via the investment management activities it undertakes
when providing insurance products and services.
The Group’s requirements for the management of fiduciary risk are laid down in the Fiduciary Functional Instruction
Manual (‘Fiduciary FIM’), which is owned by Group Operational Risk. No business other than the designated
businesses may undertake fiduciary activities without notifying Global Operational Risk and receiving specific
dispensations from the relevant Fiduciary FIM requirements.
Other policies around the provision of advice, including investment advice and corporate advisory, and the
management of potential conflicts of interest, also mitigate our fiduciary risks.
Risk management of insurance operations
Overview of insurance products
(Audited)
The main contracts we manufacture are listed below:
Life insurance business
• life insurance contracts with discretionary participation features (‘DPF’);
• credit life insurance business;
• annuities;
• term assurance and critical illness policies;
• linked life insurance;
• investment contracts with DPF;
• unit-linked investment contracts; and
• other investment contracts (including pension contracts written in Hong Kong).
Non-life insurance business
Non-life insurance contracts include motor, fire and other damage to property, accident and health, repayment
protection and commercial insurance.
Nature and extent of risks
(Audited)
The majority of the risks in our Insurance business derive from manufacturing activities and can be categorised
between insurance risk and financial risks; financial risks include market risk, credit risk and liquidity risk.
Operational and sustainability risks are also present and are covered by the Group’s overall respective risk
management processes.
The following sections describe how insurance risk and financial risks are managed. The assets of insurance
manufacturing subsidiaries are included within the consolidated risk disclosures on pages 123 to 251, although
separate disclosures in respect of insurance manufacturing subsidiaries are provided in the ‘Risk management of
insurance operations’ section. The consolidated liquidity risk and market risk disclosures focus on banking entities
and exclude insurance operations. Disclosures specific to the insurance manufacturing subsidiaries are provided in
the ‘Risk management of insurance operations’ section on pages 232 to 245.