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Risk frommembers of Thailand Clearing House Co., Ltd.’s failure to follow the obligations
Information technology systems risk
Corporate governance and corruption risks
Investment risk
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Risk classification
SET believes that risk management is a key factor to develop business sustainability. In 2014, SET continues
to improve risk management by reviewing organization’s policies and operational framework, carrying out
the business in line with the corporate strategy and upgrading the risk management standard to
the international level. Risks are classified as follows:
Thailand Clearing House (TCH) is a subsidiary of The Stock Exchange of Thailand to provide service by
acting as the intermediary between securities buyers and sellers. Being the securities clearing and settlement
guarantor, TCH is exposed to counterparty risk when one or more clearing members fail their obligations.
As such, the measures to control risk of member companies are in place such as the establishment of the
Risk Compensation Fund to handle risks from clearing and securities delivery in order to build confidence
of related parties and to minimize the risks that may incur. In 2014, rules and regulations were revised
to be consistent with Principles for Financial Market Infrastructure (PFMI) prescribed by the International
Organization of Securities Commissions: IOSCO and European Market Infrastructure Regulation (EMIR)
to boost confidence in settlement and securities delivery system among domestic and international financial
institutions.
IT systems are the integral part of the business. The damage, if incurred, can cause widespread effects
on the economic system and stakeholders. Therefore, SET has evaluated, monitored and managed risks
that may incur to computer systems in accordance with ISO27001 IT security standards (ISO27001).
A reporting process to analyze the causes and implementing guidelines, including Disaster Recovery Plan
(DRP), is carried out annually to ensure continuous systems operation.
The exchange establishes the guidelines on corporate governance and corruption risk management
by stipulating that corruption risk is one of the major risks of the organization. Thus, SET has identified
effective measures of risk management and internal controls such as separation of duty and scope of
authority, among others. The exchange also monitors and reports risk status continuously to ensure that
it will be able to manage risks in a timely manner. These processes are supervised by the risk management
and compliance unit, which reports to the senior management, as well as the Risk Management Committee
and the SET board of governors regularly.
For risks arising from investment, SET BoG determines the policy and the proportion for investment under
the supervision of an investment management working group. SET has introduced Value at Risk (VaR),
the statistic analyzing tool, to monitor and control investment risks at generally acceptable levels. The status
of investment risk is regularly reported by business unit to the investment management working group,
Risk Management Committee and SET BoG.