The asset and liability management committee (“ALCO”) was set up by the board to oversee and monitor the financial risk exposures of CITIC Pacific. At each meeting, the board receives reports of the financial results and the financial positions of CITIC Pacific, both current and projected. Written reports are provided to directors on all businesses identical to those reviewed by management at executive committee meetings. ALCO’s major functions are asset and liability management (“ALM”) and treasury risk management.
The group treasury department, headed by the group treasurer, is responsible for implementing the Treasury and Financial Risk Management Policy (“treasury policy”, see financial risk governance policy below), and communicating ALCO decisions to operating units, monitoring adherence and preparing relevant management reports to be presented to ALCO, the executive committee and the board.
All business units, whether they are subsidiaries, associates or joint ventures, are responsible for managing their financial risk positions within the confines of the overall risk framework and specific delegations defined by ALCO. They are responsible for identifying areas of risk and managing thereafter within their organisations and reporting those risks to ALCO on a timely basis.
Listed subsidiaries including Dah Chong Hong and Daye Special Steel manage their financial and treasury affairs within the framework of CITIC Pacific’s treasury policy.
The basic framework for financial risk management has been developed and is defined in the treasury policy approved by ALCO. This treasury policy is subject to periodic review so as to incorporate the latest risk standards in the market and/or business developments in CITIC Pacific.
The treasury policy sets out control requirements and ensures alignment and consistency in which the major financial risks are dealt with, from identification, quantification and evaluation to final reporting to ALCO for its decisions on both ALM and treasury risk management.