HSBC 2015 Annual Report Download - page 110

Report of the Directors: Risk (continued)
Risks managed by HSBC
HSBC HOLDINGS PLC
108
Risks Arising from Measurement, monitoring and management of risk
Insurance risk (page 188)
The risk that, over time, the cost
of the contract, including claims
and benefits may exceed the total
amount of premiums and
investment income received.
The cost of claims and
benefits can be influenced
by many factors, including
mortality and morbidity
experience, lapse and
surrender rates.
Insurance risk is:
• measured in terms of life insurance liabilities;
• monitored by the RBWM Risk Management Committee, which
checks the risk profile of the insurance operations against a
risk appetite for insurance business agreed by the GMB; and
• managed both centrally and locally using product design,
underwriting, reinsurance and claims-handling procedures.
Risks incurred in our business activities
The chart below provides a high level guide to how our
business activities are reflected in our risk measures and
in the Group’s balance sheet. The third-party assets and
liabilities indicate the contribution each business makes to
the balance sheet, while RWAs illustrate the relative size of
the risks incurred in respect of each business.
Exposure to risks arising from the business activities of global businesses
For footnote, see page 191.
Risk factors
We have identified a comprehensive suite of risk factors
which covers the broad range of risks our businesses are
exposed to.
A number of the risk factors have the potential to affect
the results of our operations or financial condition, but
may not necessarily be deemed as top or emerging risks.
However, they inform the ongoing assessment of our top
and emerging risks. The risk factors are:
Macroeconomic and geopolitical risk
• Current economic and market conditions may adversely
affect our results.
• We are subject to political and economic risks in the
countries in which we operate, including the risk of
government intervention.
• We may suffer adverse effects as a result of the
interaction between market perceptions surrounding
mainland China’s slowdown, the course of global
RBWM CMB GB&M GPB
HSBC
−HSBC holding
company and
central operations
−Deposits
−Accounts services
−Credit and lending
−Asset management
−Wealth solutions and
financial planning
−Broking
−Insurance
(distribution; life
manufacturing)
−Deposits
−Payments and cash
management
−Credit and lending
−International trade
and receivables
finance
−Insurance
(distribution; life
manufacturing)
−Deposits
−Payments and cash
management
−Balance sheet
management
−Credit and lending
−Asset and trade
finance
−Corporate finance
−Markets
−Securities services
−Deposits
−Account services
−Credit and lending
−Investment
management
−Financial advisory
−Broking
−Corporate finance
(via GB&M)
−Alternative
investments
−Trusts and estate
planning
−Insurance
Global
business
Business
activities
Risk
profile
Balance
sheet
1
Liquidity and funding risk (page 154), Pension risk (page 189), Fiduciary risk (page 189), Reputational risk (page 189),
Compliance risk (page 178), Sustainability risk (page 190) and Insurance risk (page 180). The latter is predominantly in RBWM and CMB.
Other
(including Holding Company)
RWAs
$bn
−Assets 365
−Customer
accounts 362
$bn
−Assets 1,617
−Customer
accounts 262
$bn
−Assets 81
−Customer
accounts 80
$bn
−Assets 147
−Customer
accounts 1
$bn
−Assets 473
−Customer
accounts 585
$bn
−Credit risk 154
−Operational risk 36
$bn
−Credit risk 390
−Operational risk 31
$bn
−Credit risk 285
−Counterparty
credit risk 69
−Operational risk 44
−Market risk 43
$bn
−Credit risk 16
−Operational risk 3
$bn
−Credit risk 32
−Operational risk –