About Standard Chartered

Standard Chartered PLC is listed on both the London Stock Exchange and the Hong Kong Stock Exchange and is consistently ranked in the top 25 among FTSE-100 companies by market capitalisation.

Standard Chartered has a history of over 150 years in banking and is in many of the worlds fastest growing markets with an extensive global network of over 1,200 branches (including subsidiaries, associates and joint ventures) in over 50 countries in the Asia Pacific Region, South Asia, the Middle East, Africa, the United Kingdom and the Americas.

As one of the world's most international banks, Standard Chartered employs almost 60,000 people, representing over 100 nationalities, worldwide. This diversity lies at the heart of the Bank's values and supports the Bank's growth as the world increasingly becomes one market.

Risk Management

As 2008 unfolds the financial industry lurches from crisis to crisis with unprecedented turmoil in the markets. As banks announce their results to the market the scale of losses continues to surprise the most hardened industry players. Citigroup™s $9.3 billion is among the largest portion of the $100 billion declared so far. Leading risk management consultant Oliver Wyman predicts a further $300 billion will be lost. The impact of this fallout is already being seen as America slips into recession and the global economy slows. This seismic shift is bringing about big changes in banking, causing banks to re-assess their risk-taking strategy.

Risk management is a discipline that has grown in complexity and sophistication in line with advances in the financial services sector. Recent regulatory changes have introduced a set of standard, industry-wide measures to assess risk across products, markets and customer segments.

Although the losses have been widespread a number of industry players that read the market correctly have avoided major financial loss and some, including Goldman Sachs, have posted record profits. An institution’s ability to manage its risks can be the difference between failure and success. Risk management has been thrust into the limelight by the current climate and is now at the centre of banks™ strategic thinking. Organisations that manage their risks well are using sophisticated analysis to drive strategy and identify areas for growth, while avoiding unexpected losses.

Taking into account historic lending experience and key market factors that affect borrowers™ ability to repay loans, effective risk management also considers concentrations of lending that could cause the bank financial loss, the impact of regime change, terrorism, war and disasters. Skilled analysis of risk at a portfolio, country or product level comes from a combination of local experience, loss data, legal and market knowledge as well as a healthy amount of common sense.

At the heart of effective risk management is an analysis of the likelihood of financial loss. A good framework for assessing borrowers, from individual credit card customers to large international corporate borrowers, can determine borrowers™ probability of default, the loss given default and the exposure at default. These measures underpin current risk management and form the basis of risk analysis.

At the heart of any severe loss in the banking industry is a failure by senior managers to understand the risks of the strategy they are adopting. In order to prevent these failures the risk function of any financial institution must ensure that appropriate risks are being taken in line with strategy, and that controls and limits are in place to prevent losses that would damage that organisation.

Standard Chartered™s Risk function has a very strong track record of success. The bank has avoided major losses during the current climate through sticking to its strategy and avoiding high return high risk strategies. Currently our work on assessing risk appetite is leading market practice and is part of strategic analysis at the highest level of the organisation.