Scenario 4.1

You are part of a risk management SG team, which comprises 4 to 5 members, in IIT Bank, a global bank headquartered in the United States. IIT Bank plans to apply for a full banking license to operate in Singapore. For the initial operation, it intends to offer a selected list of products and services in the first few years.

Private Banking

This is the key business for IIT bank and it has been the leading private banking business in Switzerland for years. A team of experienced relationship managers will identify suitable private banking solutions based on the profile and requirements of our high net worth customers in the region.

Financial Advisory Services

Portfolio Management Services

Trust, Tax, Philanthropy and Family Services

Will and Estate Administration Services

Personal Banking

Personal deposit accounts - including both Singapore dollar and foreign currencies savings, current and fixed deposit accounts.

Personal credit facilities e.g. personal unsecured credit lines / loans, credit cards and property / car financing.

Funds transfer and remittances services

Investment: Grow customers wealth with a wide range of Investment products

Electronic Banking: Let customers handle their banking transactions anytime, anywhere

Insurance: For customers protection assets, personal and family needs

Corporate & Small Medium Enterprise (SME) Banking

Business deposit accounts: Let customers enjoy the benefits and convenience of managing their cash with IIT Bank, including savings, current & fixed deposit accounts in different currencies

Credit facilities: Let IIT Bank be customers one-stop provider in financing solutions

Trade Finance: Full range of products to facilitate customers business needs

Cards & Payment Services: Solutions of corporate cards and funds transfer solutions

Treasury & Markets (T&M): A broad range of capabilities in T&M to corporations and financial institutions

Electronic Banking: Let customers handle their banking transactions anytime, anywhere

Business Insurance: Customer can protect their business & employees with comprehensive plans

To meet the regulatory requirements of the Monetary Authority of Singapore (MAS), the Board of Directors (BOD) of IIT Bank has tasked your team to analyze the risk management frameworks of two banks so that the Singapore office can understand the key considerations involved. The suggestion is to select the TWO banks, each bank from different regions the USA, Europe, or Asia. Note that later the Singapore office will need to develop a risk management framework to drive compliance with the related regulatory standards expected by MAS.

Your team reports to the Chief Risk Officer, Ms. Magdalene, who also heads the Risk Committee in the group office. In a recent meeting, Ms. Magdalene specifically highlighted to your team that the risk management projects should evaluate and address the various risks involved when operating a bank in Singapore. The bank should also strive to add value to the business in the Singapore office.

THE QUESTION IS: based on scenario 4.1, your report should address the treasury risk that the bank faces and how to mitigate or manage the risk. (Assess) Select ONE (1) or TWO (2) risk measurement methods, elaborate in details and how it is applied for the IIT bank scenario (2 pages).