Integrated Report 2020

INTEGRATED REPORT 2020 CIM FINANCIAL SERVICES LTD A SNAPSHOT OF OUR CURRENT RISK PROFILE, WITH A FORWARD-LOOKING FOCUS FOR THE COMING YEAR The COVID-19 pandemic continues to rapidly evolve and has adversely impacted many sectors of the economy. The economic uncertainty surrounding this crisis increases pressure on the asset quality of the Group and the degree of the impact remains highly dependent on the severity and duration of the pandemic. We have enhanced our approach to the management of risk in this rapidly-changing environment and are closely monitoring the situation with regular assessment of potential scenarios. We increased our focus on the quality of the data used to take informed decisions, through measures such as early warning indicators, prudent risk management against our risk appetite including monitoring of the credit scorecard and policy rules used to grant credit, and ensuring regular reporting to the Risk Management Committee and the Board. To meet the additional challenges, we have adapted our operational processes and provided support to our customers to ensure minimum service disruption. Whilst prioritising the health and safety of all our employees and stakeholders, Cim Group has been focusing efforts on minimising damage as well as maintaining the competitiveness of existing businesses and securing relationships with customers that have been built over many years. The events of the past months have also been a catalyst in boosting digital initiatives for the benefit of our customers and harnessing the benefits of digital transformation. We have, in so doing, strengthened our risk and control functions in order to better manage the above emerging risks. Key Initiatives and Achievements during the last financial year Risk Management Report Testing our business continuity and overall operational resiliency in response to COVID-19 2020 saw the review of current business continuity practices and expediting the preparation of a COVID-19 pandemic response framework and response plans. The Risk function was involved in every possible way to ensure maximum visibility over this uncertain period. As part of the response, the Emergency & Crisis Committee was called upon to take timely decisions regarding the well-being of our employees whilst also ensuring business continuity amidst restrained resources. To this effect, a readiness framework encompassing the three dimensions i.e. people, operations, business and financial was successfully put forward to ensure business continuity took place in an orderly and smooth manner without any major disruptions. This included various checkpoints identified by the Risk team to pave the recovery journey to the ‘new normal’. In addition, a remote working guideline was rolled out to provide basic work-from-home orientation guidance to staff members during the lockdown, following which a flexible working arrangement concept was also introduced to allow staff with family constraints to fulfil their job duties in an optimum way. Following the above experience, Cim Group has shown its resiliency to innovate during difficult times and is today strengthening its business continuity framework with lessons learnt during the lockdown. Building a dynamic credit risk framework and policy interventions Cim Finance has reviewed its credit risk framework to deal with the rapidly evolving situation. The Consumer Finance automated lending engine that relies on robust credit scorecards and a set of policy rules has been adjusted to reflect anticipated changes in risk emerging from both our own portfolio and the broader macroeconomic situation. Any change to the lending rules remains backed by analytical insights and the impact of those changes is closely tracked with focus on the use of new risk metrics. Manual credit underwriting focuses on exceptions and higher risk cases, where necessary, feeding back into the decisioning framework. In parallel, a set of client support programmes have been developed. Consumer Finance clients were given a reasonable delay to pay their monthly instalments with no penalties during the lockdown, while in other cases support measures such as rescheduling and moratorium options have been granted to those customers and associated sectors affected by COVID-19. 45