(TAIPEI) Shin Kong Financial Holding Co. Ltd. (SKFH) officially brought a new market risk management system on-line today (June 29), representing a major outlay to strengthen the group's market risk management capabilities. The new system covers financial assets of the group's life insurance, banking, investment trust subsidiaries, including equities, bonds, foreign exchange, securitized products, structured products, project investments, CDO, MBS and other instruments totaling more than NT$1 trillion in asset scale. In future, the new system will provide timely information to help management quickly track asset allocation and risk exposure to enable analysis of concentration and provide a reference for asset allocation decisions.

SKFH President Victor Hsu noted that the system marks an important development milestone for SKFH in risk management. He stressed, however, that it is not an end in itself, but rather a starting point. He thanked the partners, Algorithmics and Asia Pacific Financial Consulting, for their joint efforts in establishing the system. Hsu also emphasized that, "SKFH hopes that launch of the system will enable sustained improvements to our risk management culture. Top management needs to appreciate the importance and urgency of risk management if risk consciousness is to become integrated in the thinking and daily behavior of business units and staff."

SKFH further noted that, in order to comply with accounting standards and rules, financial institutions face increasing demands in terms of pricing of financial products and model validation. The new system therefore incorporates the Risk++ pricing model. This, together with investment in related education and training, will lay a strong foundation for future in-house development of pricing models for financial products. At the same time, the new system marks several firsts in Taiwan, including valuation of CDO and other complex instruments and inclusion of relative risk. In future, Shin Kong subsidiaries will fully utilize the robust functions of the new system to strengthen market risk management.