Page 33 - Annual Report 2019

30 ANNUAL REPORT 2019 SUPERVISION AND AUTHORISATION

Insurance Supervision
In 2019, the Insurance Supervision t
for 21 insurers and insurance intermediaries, Amendments to the risk-rating model Investment Management
conducted thematic review
prudential returns and conduct The Regulatory Authority revised its risk rating methodology Investment Management Supervision was responsible for
visits, all important activities in the Regulatory for firms with the sole aim of ensuring that firms are the ongoing supervision of 10 investment management
Authority’s risk-based approach to supervision. categorised based on the risks they pose to regulatory and advisory firms during 2019. Certain firms reported
objectives. The amendments make the Regulatory Authority’s on a monthly basis and others quarterly. Return reviews
risk-based supervision framework as dynamic and forward- were conducted during the month after submissions were
looking as possible and ensure it can respond effectively to received, and this off-site supervision was augmented
changes in the financial markets and the broader economy. by regular interactions with senior management at
The Regulatory Authority has adopted the Basel Committee firms and risk assessment visits. Two new investment
on Banking Supervision’s “Core Principles for Effective management firms were authorised during the year.
Banking Supervision” as its source for detailed supervisory
standards and criteria. Collective investment schemes Risk assessment visits

Asset quality reviews Investment Management implemented a system to Risk assessment visits were conducted during the year
supervise investment products sold or managed by all as part of an ongoing monitoring process of the 10
In 2019, the Bank Supervision team continued its focus on QFC firms. Investment funds registered in Europe are advisors and investment managers in the QFC. For three
asset quality reviews and conducted risk assessment visits to the main products sold by QFC firms. Most allocated firms, the supervisors issued a risk mitigation plan to
five banking institutions to evaluate the credit underwriting products are invested primarily in equities, while assets be fulfilled by year-end, which included governance,
criteria, concentration risk, banks’ implementation of an ECL booked in fixed income funds showed an increase. risk management and conduct requirements.
framework, and accuracy of prudential reporting.
Product returns framework
Banking charts
Following the enhancement of IOSCO recommendations
The department held meetings with firms’ senior for funds, Investment Management reviewed the standards
management, governing bodies and external auditors used to collect information and modified the format to
to assess the firms’ risk profiles and devise appropriate be implemented for managed funds. The modifications
supervisory interventions to address concerns. Key charts addressed IOSCO’s 2019 recommendations for funds’
were used to analyse trends and identify emerging risks, leverage. The implementation is undergoing technical
strengthening the Regulatory Authority’s risk-based modification so that it may share the same repository system
approach to supervision. Please see pages 38 – 55 for a and format used for business returns. It includes investment-
selection of banking charts documenting important trends linked products allocated by insurance intermediaries.
per risk category, relevant to the Regulatory Authority’s
authorised banks. These charts form the basis of prudential
engagements with banks’ boards and senior management.