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Risk Management


  • Establishing an independent and effective risk management mechanism of the Bank to assess and supervise the risk tolerance and the current risk tolerance situation, and determine the risk response strategy and compliance with risk management procedures, all to effectively identify, measure, monitor and report various risks, and ensure sound management of the Bank.


  • The Bank has established an overall risk management policy that includes a risk management framework, risk management scope (including credit, market, operations, face interest rate, liquidity and other risks), and three lines of defense in risk management (including the risk tolerance unit, dedicated risk management unit, and independent internal audit unit as well as their responsibilities), and five major aspects of risk management procedures (identification, measurement, monitoring, reporting and implementation procedures).

Goals and Targets

  • The Bank assists various indicative management units in identifying and controlling the Bank’s various operational risks in real time in accordance with changes in domestic and overseas financial situations to ensure its stable operation and sustainable development.
  • The Bank continues to develop appropriate strategies in response to the changes in domestic and overseas financial supervisory regulations and risk management models.
  • The Bank continues to integrate all kinds of risk indicators inspection assessment and information and the subsequent notification mechanism so as to take early response measures to control the quality of the Bank’s credit assets effectively.
  • The Bank continues to improve the performance of existing personal credit rating and corporate credit rating models to achieve the best results of credit risk management.
  • In response to the evolution of market risk monitoring because of the implementation of the New Basel Capital Agreement, the Bank continues to study and strengthen the management efficiency of systems related to market risks.
  • Through the industrial characteristics of financial intermediation, the potential risks of the environment are considered, the Bank properly uses the bank capital and shoulders the responsibilities of environmental protection and social sustainability.
  • The Bank continues to improve the existing risk management tools for operations and strengthen the connection and integration between various management measures to achieve the best results of risk management.

Responsibilities / Duties

  • The Bank has established the management policy and three lines of defense for internal control of Chang Hwa Bank to construct a three lines of defense framework for internal control of the Bank, which clearly defines the scope of powers and responsibilities of the three lines of defense, so that all units understand their role and function in the overall risk and control framework of the Bank in order to strengthen communication and coordination of risk management and internal control work.


  • 1st Line of Defense: Each division and Operation Units- Identifying and implementing risk management.
  • 2nd Line of Defense: Risk management division- Planning. Establishment and supervision.
  • 3rd Line of Defense: Internal Auditing division- Audit and inspection.

Subtanstial Activities

  • The Bank assists each indicative management unit in keeping abreast of the important information on business activities, overall situation of business, and changes in the financial environment, so as to identify and control operating risks in real time.
  • The Bank keeps abreast of the situation of various national risk limits, and regularly reports the country’s national risk exposure values and monitoring status to the entire Bank immediately and accurately.
  • The Bank tracks and examines the political and economic situation of various countries from time to time to keep abreast of downgrade of credit rating of countries or changes in major events and take necessary measures accordingly.
  • A system provider sent personnel to the Bank to execute the automated modeling platform development project, to improve the Bank’s analytical skills in the application of risk model data. Currently, the data inventory and conversion work have been completed, and the correctness of the imported risk data has been continuously verified to lay the groundwork for the data on credit risk modeling in the future, while accelerating the timeliness of internal adjustments made in response to changes in the external environment.
  • The Bank imports information from external information providers to improve the timeliness of obtaining negative information on its creditors and major information by automatically collecting and compiling information on a daily basis, while providing the latest information to relevant managers through the instant push notification of mobile phone communication software and taking early response measures to reduce credit risks and strengthen the management following the provision of credit to enterprises.
  • The Bank monitors various financial product positions traded and the situation of risk limits every day, and reports to the Board of (Managing) Directors on the relevant risk exposure situations regularly.
  • The Bank has completed the trial calculation of the “operational risk capital calculation table,” and submitted it, along with suggestions in line with law amendments, the consultant’s report, and the Q&A document, to the Bankers Association of the Republic of China while submitting a report to the Banking Bureau, FSC.

Management policy evaluation

  • The Bank has established a Risk Management Committee to oversee and integrate the review, supervision and coordination of the Bank’s various risk management matters; implement the risk management policies and procedures, risk appetite statements and risk management mechanisms approved by the Board of Directors; review the risk management procedures and monitor their appropriateness; and ensure effective communication and coordination of relevant risk management functions. And report to the board of directors quarterly.
Management policy evaluation

Response Measures for COVID-19

  1. The Bank has stipulated the Chang Hwa Bank Business Continuity Plan and the Chang Hwa Bank Directions of Emergency Response Measures for Compulsory Collective Isolation Responding to Epidemics, as such, in the event of a major outbreak, various business activities can continue to operate normally. As for the COVID-19 epidemic, the Bank has formed the Chang Hwa Bank Epidemic Prevention Program Responsible Team in Response to COVID-19, led by the President, and the Chang Hwa Bank Epidemic Prevention Program in Response to COVID-19 was formulated; the relevant response measures are as follows: 
  1. All units shall clean and disinfect the environment of the premises.
  2. Employees shall wear masks and take body temperature every day to self-manage their own health, while dedicated personnel are appointed to monitor the online system of "Employee Daily Attendance and (Wuhan) COVID-19 Notification Daily Report" on a daily basis. Where there are any abnormal health conditions, the personnel will learn about and track the situation immediately, while providing assistance related to epidemic prevention.
  3. In order to reduce personnel exchanges, the Bank’s Beitou Guest House, Hairdressing Department, and Laundry Department have temporarily suspended services, diverted elevator traffic, and controlled the building’s fire exits to maintain "exit-only." Visitors or persons with abnormal health are prohibited from entering the building, and a document exchange area is set up to avoid mutual communication between people on different floors.
  4. The dining area of the employee restaurant is closed and an open buffet is not provided. The employee restaurant shall serve meals in the form of lunch boxes through reservation. The restaurant staff will deliver them to each floor, and announcements are made to call for colleagues not to dine out as much as possible to reduce the risk of infection during dining.
  5. Since March 4, 2020, the Bank’s Treasury Division and IT Division have adopted the “off-site backup” method for office work, while the remaining units at the head office and the Offshore Banking Branch have adopted the "different-floor and same-building backup" approach since March 5, 2020, and the tables, chairs, power supply, telephone, network, air conditioning equipment have been prepared at the backup site in different places. In the event that the Taiwan Centers for Disease Control (CDC), Ministry of Health and Welfare, announces a community infection, the off-site backup mechanism will be activated.
  6. As the epidemic situation is slowing down, the Bank has adjusted some anti-epidemic measures since June 8, 2020 in line with CDC's new lifestyle anti-epidemic measures.