• INMA Part S1.4 INMA Part S1.4 Other risks that may be addressed in risk management policy

    • INMA S1.4.1 Market risk

      (1) Market risk is the risk of loss resulting from adverse movement in the relative values of assets and liabilities because of changes in general market factors, such as interest rates, inflation and foreign exchange rates. Market risk includes asset-liability management risk.
      (2) If an INMA firm is likely to be exposed to market risk, its risk management policy should include processes and procedures for identifying, assessing, managing and mitigating that risk.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA S1.4.2 Concentration risk

      (1) Concentration risk is the risk of loss resulting from:
      (a) large exposures to a single counterparty, market or geographical area; or
      (b) exposures to large or one-off transactions.
      (2) If an INMA firm is likely to be exposed to concentration risk, its risk management policy should include processes and procedures for identifying, assessing, managing and mitigating that risk. The policy may set out limits for credit exposures, at individual and consolidated levels, to:
      (a) single counterparties and groups of related counterparties;
      (b) subsidiaries and related entities;
      (c) single industries or markets; and
      (d) single regions.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA S1.4.3 Credit risk

      (1) Credit risk is the risk of loss resulting from:
      (a) default by debtors and other counterparties; and
      (b) assets losing value because their credit quality has deteriorated.
      (2) If an INMA firm is likely to be exposed to credit risk, its risk management policy should include processes and procedures for identifying, assessing, managing and mitigating that risk.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA S1.4.4 Group risk

      (1) Group risk is the risk of loss resulting from membership of a corporate group or linkages with related parties. Related parties includes not only other members of a firm’s corporate group but individuals who are in a position to exercise significant influence over it.
      (2) Corporate group membership and linkages with related parties can be a source of both strength and weakness.
      (3) If an INMA firm is likely to be exposed to group risk it should include, in its risk management policy, processes and procedures for identifying, assessing, managing and mitigating that risk.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA S1.4.5 Settlement risk

      (1) Settlement risk is the risk of loss resulting from a counterparty not delivering a security (or its value in cash) in accordance with an agreement to do so.
      (2) If an INMA firm is likely to be exposed to settlement risk, its risk management policy should include processes and procedures for identifying, assessing, managing and mitigating that risk.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA S1.4.6 Valuation risk

      (1) Valuation risk is the risk of loss resulting from an asset being overvalued and, when it matures or is sold, being worth less than was expected. Factors contributing to valuation risk include incomplete data, market instability, uncertainties in financial modelling and poor data analysis by the people responsible for determining the value of the asset.
      (2) If an INMA firm is likely to be exposed to valuation risk, its risk management policy should include processes and procedures for identifying, assessing, managing and mitigating that risk.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).