CFSL Integrated Report 2025

RISK MANAGEMENT

96

Corporate Governance

Statutory Disclosures

Financial

Mismatch in the timing of cash inflows and outflows could impact the Group’s cashflow management and its ability to meet its financial obligations. Funding risk may arise from an over-reliance on specific funding source(s), gaps in funding, or concentrated maturity dates.

Liquidity & Funding Risk

Risk Response/Mitigation Measures

Board-Approved Funding Strategy: A comprehensive funding strategy, endorsed by the Board, provides clear direction for managing liquidity and funding needs. Contingency and Recovery Planning: Well-defined Contingency Funding and Recovery Plans are in place to ensure preparedness for potential liquidity stress scenarios. Active Liquidity Management: The Treasury team actively manages daily liquidity positions and ensures alignment between asset and liability maturities.

Diversified Funding Sources: A stable and diversified pool of funding sources is maintained to reduce reliance on any single counterparty or funding channel. Liquidity Buffers: Adequate liquidity buffers are held to meet short-term obligations. Oversight by ALCO: The Asset and Liability Committee (ALCO) regularly reviews liquidity and funding risks, ensuring proactive management and strategic oversight.

Interest Rate Risk

Group’s assets and liabilities have differing interest rate structures or maturities, leading to an imbalance.

Risk Response/Mitigation Measures

Interest Rate Gap Analysis: Regular analysis is conducted to assess the sensitivity of assets and liabilities to interest rate fluctuations and identify potential mismatches. Monitoring and Reporting: Interest rate exposures and market trends are closely monitored, with findings reported to the Asset and Liability Committee (ALCO) and the Risk Management Committee for oversight.

Alignment of Maturities: The maturities and interest rate profiles of assets and liabilities are actively managed to reduce exposure to interest rate volatility. Stress Testing and Scenario Analysis: Simulations are performed to evaluate the impact of various interest rate environments on the Group’s financial position and capital adequacy.