Risk management



2017 marked a successful year of the economy as well as the Vietnam securities market, with a 48% increase of the VNIndex along the strong participation of foreign and domestic investors. Stocks with a history of price speculation, stocks of poor businesses remained mostly unchanged; indicating the trend of investors choosing intrinsic over highly speculative stocks. Given support from market factors along with competent staff and clear strategy from the Leader to seize the opportunity, 2017 continued to be a year of strong growth for SSI in terms of personnel, customers, business results, market share, margin loans, etc. Meanwhile, risks have been limited to the lowest level, below the risk limit approved by the Board.

In 2017, the Company's risk management policies and procedures continued to be completed and updated, in line with business practices as well as risks arising from new business operations such as derivative securities. In addition, in order to improve the effectiveness of risk management activities, training activities on risk awareness and risk prevention have been widely provided to all employees.

Risk management activities are carried out seamlessly from top to bottom, initiated by the BOD through the development of business strategy and risk tolerance limits for each type of risks and each specific Business Unit, as follows:
-  To develop and align a culture of risk management to every employee whereby each individual to engage and contribute to risk management activities;
-  To develop a strong and transparent corporate governance structure in order to determine accountability of each individual and department in the organizational structure;
-  To develop a mechanism of control and oversight to keep risk within the limits allowed;
-  To issue of documents under policy framework and methods to identify, measure, control and mitigate key risks.

The Risk Management is organized by types of risk in order to ensure a high level of specialization:


Risk management activities are conducted specifically according to the 5-step process as follows:

1. Risk identification
Risks are determined based on indicators or areas with exposure to potential risk in the Company's business operations. Input data to determine risks includes:

  Database of risks occurred in business operations that have been identified, and have been reported and detected through Internal Control, Internal Audit, and Independent Audit activities. Based on this data, the Company can assess and predict the risks likely to occur in the future;

  Based on analysis of historical data on the risks occurred and the likelihood of future risks to identify areas with high risk exposure. This method contributes to improve risk management based on the inheritance of experiences and lessons from the past;
  Changes in business strategy, the operating procedures as well as the development of new products, new business activities or execution of business restructuring;
  Recommendations and feedbacks from Government Agencies, Independent Audit, Internal Audit, and Internal Control;
  Changes in business environment, policies and laws.

2. Risk measurement and assessment
SSI uses qualitative and/or quantitative methods of assessment to appropriately measure each specific type of risk.


Quantitative models are prioritized to quantify risks. These models could calculate and estimate exposure values of market risk, settlement risk, operational risk, liquidity risk, as well as others. These risk exposure values are quantified to a specific figure or a specific percentage. A number of typical models used by SSI to measure risk include:
  Standard models, as stipulated in Circular no. 226/2010/TT-BTC dated December 31, 2010 and Circular no. 165/2012/TT-BTC dated October 9, 2012 issued by the Ministry of Finance;
  Quantitative models VaR (Value-at-Risk) used to calculate the maximum level of volatility for a stock, or index to be used in derivative transactions with a predefined confidence level and time period;
  Stress testing model used to assess the maximum loss that may occur according to a predetermined scenario for the Company to take loss limiting measures when necessary;
  Quantitative scoring model and quantitative stock model based on historical data of price and volume volatility;
  Banks' appraisal and rating models.

3. Risk limit identification
To ensure that risk is limited to the lowest level of tolerance, as well as to improve the effectiveness of risk oversight, the Company has established a set of risk indicators and limits for key risk exposure.

Risk limits are determined by both qualitative and quantitative methods. In particular, the latter has priority over the former.

Limits for each type of risk is determined based on:
  Data and historical events related to the risks being monitored;
  Risk appetite and targets of the BOD;
  Actual operating activities of trading and related business divisions based on views of the divisions' heads.

The Risk Management Director proposes limits for each type of risk, with references to the characteristics of each business department for approval by the CEO.

The CEO proposes the total risk limit as well as specific risk limits for each business department for approval by the BOD.  

4. Risk monitoring
Risk monitoring activities are carried out on a daily basis, mainly through risk indicators and limits of the indicators. A number of risk parameters are set and limited automatically on the system, and others based on daily risk management reports in accordance with predetermined forms, or both.

Risk monitoring activities are carried out firstly by the business departments where the risk incurring transactions take place, followed by supervision of independent departments including Risk Management, Internal Control and ultimately Internal Audit.

When risk positions approaching warning levels, the Risk Management will issue a warning and request specific measures from the risk-generating business departments, and at the same time, coordinate with them to develop action plan to bring the risk positions back to safety threshold.

5. Risk handling
Risk handling activities are based upon review and assessment of factors such as the severity of the risk to be handled, the frequency of risk occurrences, costs of risk mitigation, risk characteristics, etc. The company implements a number of measures of basic risk handling as follows:
  Risk tolerance: When the cost of risk handling is a significantly higher than that of the losses incurred due to risk exposure, no handling measure is necessary;
  Risk avoidance: Any activity that could lead to the risk exposure that the BOD has a zero or very low risk tolerance, or that exerts potentially serious impact on the image and activities of the Company shall not be carried out;
  Risk mitigation: Applying measures to mitigate potential impact on the Company or to minimize the probability of risk occurrences, or both;
  Risk sharing: Transferring all or part of the identified risks to another party, such as purchasing insurance (if comparable services are applicable) for operating activities;
  Developing a monitoring and risk warning system for timely detection of potential risks and marginal risks for prompt risk handling.

General risk handling process:
  Identifying causes of increased risk positions, and causes of risk generating events;
  Selecting and developing handling plan, including specifications of responsible units for implementation, implementation schedule, expected results, resource assessment and planning, and required procedures;
  Performing risk handling in accordance with selected plan;
  Reviewing and updating relevant policies and procedures to avoid similar incidents;
  Adjusting relevant limits if necessary to align with reality.



SSI's core business activities exposed to market risks include investments in bonds, shares, deposits, margin lending, and derivative products.

Revenues from these activities are affected by fluctuations in interest rates, stock prices, derivative indexes, possibly due to market conditions or changes in monetary policies or macro policies of the government of Vietnam or other countries concerned, possibly due to geopolitical turmoil as well as other legal regulations. When interest rate and stock price fluctuations are unexpected, there exists the risk that revenue and profit of the Company would move in adverse direction.

To mitigate these risks, SSI ensures that risk management is carried out in a specialized manner and separated by risk types and that there is close coordination among related department with Risk Management from monitoring, assessment, market view and prediction, and investment strategy, to the limit system, risk diversification strategy, risk warning and handling process.


Investment in deposits/ bills/ bonds/margin lending:
With owner's equity of more than VND8,616 billion by the end of 2017, total assets of VND18,764 billion, average cash position of VND4,074 billion, including more than VND2,257 billion of investors' cash flows fluctuating according to transactions, borrowing/repayment activities and investment disbursement that take place daily without restriction to a specified time frame. Such operations require SSI to balance capital and corresponding interest rates to optimize returns and realize predictions on interest rates. Even with modest interest rate fluctuations in 2017, SSI Treasury still managed to optimize interest rates trading, contributing a significant part to the Company’s revenue while ensuring the highest level of safety.

To anticipate the risk of stock price volatility that affects margin lending, the Company conducts assessment of macroeconomic conditions, changes in regulations, government policies related to specific sectors, and geopolitical issues that may impact the overall market or a specific sector either periodically or unexpectedly upon occurrences of events for appropriate adjustments in margin lending activities.

Investment in Stocks
Stock investment portfolio is directly affected by internal factors of the economy as well as international variables. Unforeseeable fluctuations in macro factors can cause stock prices to fall and negatively affect business results. However, highlighted in 2017, SSI managed to capture market opportunities to divest and invest in companies in the basic and staples sectors of the economy that underwent little impact from market fluctuations while possessed potential for stable development. In addition, the Company expanded support for our associated companies in maximum capital mobilization, establishing a solid financial foundation for manufacturing and business expansion, raising the core value of their stocks and maintaining a positive momentum for their stock prices to grow.

In addition, post-investment management has been carried out in a stringent and prudent manner, typically assigning dedicated staff to each group of companies, conducting regular site visits and working directly with senior executives to understand their vision, strategy, and plan of the companies in the portfolio. In particular, SSI to nominate representatives to take positions in the BOD and or the SB and/or the Board of Management in companies where SSI has a large ownership stake. As a result, the Company can go along with the businesses in all activities, and also to better manage its investment portfolio.

Investment in Derivative Securities
The derivative securities market was officially put into operation in 2017, and SSI was one of the first Securities Companies licensed to trade derivatives. With thorough preparation of people, systems and processes, the Company holds the largest market share in the derivatives market of 28.28%. Derivative securities have high levels of leverage, leading to rapid changes to clients' accounts during trading according to market movements. Thus, prudent determination of initial margin helps the Company mitigate the risks prompted from high volatility of the derivatives index. SSI Risk Management has developed risk management procedures for derivative financial instruments as well as conducted quantitative measurements to determine the initial margin rate and appropriate alert levels to limit potential risks to the company as well as ensure compliance with the law.

In addition, SSI Risk Management also monitor daily market developments to be able to timely provide response measures to mitigate risks when necessary.


The Company's credit risk arises mainly from margin lending activities, and investments in bank deposits and bonds. The risks arise when a partner fails to pay a part or all of its debt obligations to SSI when due.

Investments in Deposits
Investments in deposits at commercial banks are considered to have the lowest level of credit risk; However, if occurring, such risk can cause great damages. Therefore, SSI always reviews careful before conducting transactions with Banks based on the Banks' credit rating, followed by periodic reassessment. Each commercial bank would be assigned a specific deposits limit depending on their specific credit rating, as well as certain terms and conditions, to ensure maximum capital preservation. At the same time, SSI established overdraft limit mechanism with multiple banks for simultaneous operation with bank deposits. This allows us to maintain liquidity capabilities while ensuring flexible capital uses and providing for credit risk, as bank deposits contracts always have provisions for flexible withdrawal of the overdraft facility. During our 18 years of operation, SSI has incurred no irrecoverable bank deposits. This is an achievement that testifies for the highly effective credit risk management activities at SSI.

Margin Lending
Margin lending refers to collateral lending activities, secured by clients' loan portfolios that have been approved by both SSI and SSC for margin lending. Credit risk arises when the Company is unable to recover sufficient debt upon disposal of all collateral assets of a client, or to process collateral assets due to loss of liquidity and deep depreciation, or cancellation of listing, while the client fails to provide additional collateral assets. In order to mitigate such credit risk, SSI employs a series of coordinated measures, as follows:
  Establish a prudent collateral portfolio based on compliance with regulations by the State Securities Commission of Vietnam. At the same time, rate stocks in consideration of liquidity, price fluctuations and stock valuation based on the corresponding company's financial and operation analysis report. Based on stock rating, the Company will set lending rates and limits consistent with stock quality.
  The portfolio of collateral assets is revalued monthly to mark to market fluctuation of the stocks. At the same time, individual cases are evaluated as soon as relevant negative news incurs.
  Develop a cross-cut limit system to control concentration of outstanding lending balance as well as alert levels for timely recovery of debts:
    Total volume limit for margin lending,
    Maximum limit per client,
    Maximum limit per stock,
    Safety warning level,
    Liquidation warning level, etc.
  Monitor the outstanding balance, concentration of outstanding balance by client, stock and daily risk exposure to timely risk detection. For instance, outstanding balance with high concentration on a specific client or a specific stock, stocks with abnormal price volatility, stocks with unusual news, stocks with abnormal and suspicious transaction movements in trading session, etc.
  Rate and appraise margin lending clients to ensure SSI’s criteria and regulations. Increase Broker’s client management responsibility with regards to warning communication and loan recovery, etc.
  Refrain from competing for market share and outstanding lending balance through over-extending margin lending services

In 2017, with the overall growth of the market, and the strategy of diversifying the portfolio of client margin lending, increasing the lending of leading and highly liquid stocks, the Company's outstanding margin lending balance grew from an average of over VND3,294 billion in 2016 to an average of more than VND4,150 billion in 2017, with the highest balance reached over VND5,632.7 billion. Risk was well managed with no bad debt incurred in 2017.

Investments in Bonds
Investment in bonds is exposed to the risk of bond issuers losing their liquidity at the bond’s maturity, or the risk of unexpected adversities leading to the bond losing its liquidity. In order to mitigate these risks, SSI has in place an assessment procedure to examine all details and aspects of a bond investment proposal, similar to a credit assessment prior to investment. However, as interest rates on Government bonds remained low and the FED's interest rate hikes in 2017, SSI mainly invested in government bonds and government guaranteed bonds. For corporate bonds, SSI assessed very carefully, and only invested in bonds issued by reputable businesses with sufficient collateral assets.


Liquidity risk occurs when SSI loses its ability to fulfill its obligations to pay part or all of the due debts, failing to meet the demand for payment of securities purchased by investors using margin lending, or experiencing delay or failure to meet the requirements of payment activities of investors on accounts maintained at SSI. With the number of clients growing over the years, mounting to over 127 thousand accounts in 2017 across SSI branches in different cities, receiving hundreds of payment requests per day, SSI must ensure the quickest, safest, and most cost effective way to conduct payment operations for investors. In order maintain flexibility in serving clients, SSI has connected with dozens of banks to manage an average investor deposit balance of over VND 2,257 billion in absolute safety.

In 2017, SSI's margin lending service continued to maintain strong growth, requiring high flexibility in balancing daily cash flow between timely cash disbursement (in margin lending) and efficient use of cash flow when investors repay margin loans. SSI also holds the largest securities investment portfolio in the market, thus the management of low liquidity investments also requires a sound balance of owners' equity, to be able to reinvest the capital to capture investment opportunities. In 2017, SSI continued to ensure absolute liquidity management, without the occurring of any risky incident. Net capital ratio remained high between 464% and 555%, well above the regulatory 180% set forth by SSC.


This achievement was thanks to a stringent cash flow management process, which was established based on the particular priority given to liquidity risk management and the close collaboration fostered between SSI’s offices and divisions. All business units have access to a regular and detailed reporting system for timely information update.


In 2017, in order to further increase margin lending activities, SSI mobilized more capital from bank loans and bond issuance, which leads to more complicated cash flow management. However, the Company maintained a reasonable and balanced ratio between assets and liabilities, following the basic liquidity risk management.




The contingency of the business is not only depending on best products/service or business strategies but also requiring a stable operating environment. How to enable the environment with maximum stability but minimum risk is the top subject in technology section of the organization.

System Risk Management in SSI is classified into 5 different categories.


Each of these categories, SS has significant investment and sufficient operational controls to protect its corresponding risks. SSI has strong Policies, Process and Procedures (PPP) on governing the internal technology operations, and usage of facilities.

For public accessing control, SSI has full camera monitoring and 24x7 security guard in all areas. For the protection of the risk of intrusion and cyber-attack in public network, anti-DDoS, antivirus, and other facilities are used.

For internal network, SSI has multi-zoned network, tight policies in our firewalls, proper Intrusion detector.

For servers & applications, SSI has dynamic password access control, unauthorized access detector, and penetration testing facilities.

For business information, SSI doesn’t allow any access except the corresponding application. All database are located in the core network of the entire setup.

For disaster recovery protection, quarterly review of our Disaster Recovery Plan (DCP) is maintained. SSI also performed the stress test of its DCP on November 2017.

For system stability protection and improvement, SSI keeps the strategy on having redundancy for all facilities. SSI reviews the capacity and utilization for every quarter. SÍ also maintained 96% compliance of Service Level Agreement (SLA) on supporting out 700+ users with over 12,000 requests in a month.  


Compliance risk refers to the risk that the Company must face in the event that the Company or its employee violates or does not comply with the provisions of the law, the provisions of the Company's charter, internal and professional procedures, regulations, including professional code of ethics.

Preventing and limiting compliance risks are considered an important task of the Company. A number of measures implemented by the Company to prevent compliance risks include:
    Process and operational design with cross-checking among individuals and divisions. At the Company, operational procedures and operational apparatus are designed for mutual cross-check to enhance internal inspection and supervision, limiting power abusing and allowing early detection of violations;
    Improving employees’ compliance awareness. Training and advocacy of compliance are attended to. Newly recruited employees are trained in common procedures, regulations and special regulations related to their areas of work. During the time at SSI, employees are trained periodically to have strong grab on work process and raise awareness of compliance;
    Establishing an internal inspection and supervision system;
    Applying stringent discipline to violations of the Company's regulations.

In 2017, the Company's Internal Control conducted 43 inspections across various divisions for compliance checking of internal procedures and regulations and relevant laws, representing an 7.5% increase compared to the one of 2016. Reports are sent to the CEO, Managing Directors and Head of Legal & Internal Control for timely handling of violations, updating and correcting operational procedures to mitigate risks and increase work performance.

Adherence to corporate accounting system and compliance with tax law is also a focus of the Company. The Company conducted 32 audits in 2017 related to accounting entries, financial reporting and tax auditing. Internal audit activities promptly detected errors and proposed compliance measures to the CEO. Internal audit activities have increased the effectiveness of compliance risk management in the Company. Published financial statements, tax reports and net capital reports of the Company were ensured honesty and objectiveness, in accordance with accounting standards and regulations.

The Company maintained annual training for the entire staff on professional ethics, internal control, and money laundering prevention and control. The Finance and Accounting Department was also trained to update legal knowledge on accounting and tax law, and participated in training courses organized by administrative agencies.

The company has developed and issued regulations to support staff to improve their professional knowledge. This regulation has encouraged many employees to actively participate in courses to update specialized knowledge or long-term courses to improve their professional knowledge. Job positions requiring personnel with practicing licenses were fully met.

By improving the awareness of compliance, increasing the frequency of control and timely updating and finalizing of process, in 2017, the number of violations and errors was strictly controlled and there were no significant errors.

A number of compliance risks that the Company has identified and developed control measures for 2018 is presented in the following table:





Branding in the finance – securities sector, in our perspective, has extended beyond being a symbol for clients to identify and position our business products and services; it has become a valuable intangible asset. Reputation risk refers to the loss or damage of value those results from changing Clients’ perception of the Company, creating major impacts on their demands for the Company’s products and services, as well as all general business activities.

Based on our insightful awareness of the potential reputation risks, SSI has established and implemented an effective brand development and management strategy. Our branding is represented, firstly, by the images and information that are communicated through both public and internal media channels. Yet, more importantly, it is also showcased through our products and services, as well as any experience and interaction, no matter how small, between our clients and our representatives. As such the concept “brand ambassador” has taken a higher level of meaning, empowering each and every individual at SSI with the capability to convey important messages about the SSI brand to both our clients and the public. We always strive for consistency and strategic alignment in these messages. Our vision is “The Business of Success” and our mission is to establish SSI as a transparent financial institution.

Maneuvering through today’s information highway, SSI has chosen transparency to be our guiding communication principle to minimize reputation risk. Transparency is key to building trust of our Shareholders and Investors: Information, whether negative or positive, is processed in a consistent manner to provide them with a genuine perspective. When inaccurate information about SSI is published, we apply the same principle of transparency in handling: always willing to initiate direct dialogue with the public, providing factual and credible information to work towards a resolution Respecting the investment value from our shareholders, SSI is fully aware of our responsibility to provide our shareholders and investors with transparent, complete, accurate and timely information.

As the impact of social networking on branding becomes more powerful, instead of being passively responding to the flow of information, SSI has worked with leading consulting firms to be able to listen to the most detailed discussion of investors, clients, not only on the SSI brand, but also on the stock market. This information helps SSI both take initiative in responding to misleading information, and access a valuable source of information to observe market orientation, so that SSI can continue to pioneer on the path toward market transparency.

In order to mitigate reputation risk, SSI has been working to establish a systematic and professional communication process and plan. Our communication plan is clearly defined every year so that essential information can be related in a timely and complete manner. All materials, messages and announcements from SSI go through a strict internal review process to ensure precision and consistency. To date we have issued and implemented various regulations and rules for information reporting and publishing, with particular provisions for conducting interview with public media, as well as sharing information and producing written materials on SSI’s business activities. Most notably, SSI has in place a clear procedure for correcting false information on public media, asking all of our staff to be responsible for alerting the company about the existence of false information. We also prepared a full guideline for crisis management, emphasizing a willingness to collaborate, share and communicate with the media and the public.




Positive changes in macro factors of the economy in general and in the stock market in particular have presented the SSI human resource division with new challenges and opportunities. Understanding that human resource is our most valuable asset – the defining factor in making SSI the difference on the market – we expended focus and effort in developing policies and activities for structured and comprehensive human resource management

In 2017, the stock market continued to show huge demand for manpower as companies operated and expanded. When there was insufficient supply, securities companies were forced to recruit talents from competitors in the same sector. As tension between those who need to attract talents and those who want to retain talents builds, it is understandable that salary competition, employee turnover and job switching ratio all increased.

Faced with challenges in human resource management to sustain and develop the staff, risk management activities in this area were also carried out with significant attention. Not only limiting to strict recruitment screening, expanding of recruiting channels, enhancement of staff training, critical performance evaluation and benefit policy development ensure mitigation of manpower shrinkage and losses; SSI also focuses on listing potential risks may be encountered in HRM activities to determine risk assessment and scenario-specific handling.


In conjunction with employee selection and recruitment, we consider employee training to be a key element in safeguarding and raising human resource quality, as well as an important source of employees’ inspiration and motivation. Training programs are designed for specific types of audience, helping to increase work effectiveness, reduce business risk and improve organizational solidarity. As we anticipate changes to the legal framework for human resource and an increasingly challenging market, more than ever, the SSI team needs to strive for a new level of performance and growth and provide our clients with more competitive values.

Benefits policy and performance measurement program always serve as a parallel duo to ensure employee satisfaction, internal fairness and market competitiveness, creating a professional work environment for staff development.

Optimize operating costs but still warrant the pace of HR development in both quality and quantity to adapt to market requirements; attracting and retaining talents, especially high-level personnel is always a challenge for the human resources management activities. SSI gives priority to the systematic and procedural management of our organization, ensuring strict compliance, sustainable development and sufficient provisional staffing throughout, so to mitigate risks from fluctuations in our human resource. For human resources management activities, the accuracy and security of information are always considered a major concern. Periodic reports show trends in the Company’s personnel are conducted through an information management system to help the Leaders better manage and predict staffing situation, as well as develop training schemes, recruitment, and policies consistent with actual situations. With the support of technology systems, personnel activities have also been able to mitigate risks and improve operational efficiency.

Besides, SSI continues to maintain internal communication channels to share vision, strategy and strengthen corporate culture to foster the Company’s spirit. This sharing also acts as a motivating factor, provides information and avoids unnecessary tension. It also serves as an assurance measure for seamless information and ensures that every employee understands individual as well as common objectives to continue making their best contribution to the development of the Company. With the high level of sharing and transparency within the organization, operation will be more smoothly, reducing negative impacts on human resources.

With new challenges and opportunities, human resource management activities at SSI have received valuable attention and support from the Management Board for the development of a human force high in quality and rich in SSI's culture. SSI will continue to be a “cradle for talent development.” Here, we fuel ambitions and are willing to provide opportunities for employees’ experiment and development. Through our management system and cross-checking processes, we can boldly facilitate experimenting and trying for staffs while ensuring mitigation of potential risks.



Legal risk exposed to the Company in the course of legal compliance due to regulatory changes, failure to comply with regulations or in the arising of disputes and litigations, etc., from stakeholders during the process of the Company's daily operation. The BOD attaches great importance to this issue, and therefore does not tolerate any risks due to deliberate violations of legal regulations.

In order to limit the risks arising from changes in laws or regulations, SSI organizes the Legal Department with licensed lawyers as well as uses external professional legal consultancy services in case of need. The Legal Department and external consultancy are responsible for updating newly issued legal documents to the BOD, the Board of Management and relevant Departments; studying the impact of to be issued draft legal documents on the Company's activities for proper preparation. In addition, the Division is also in charge of providing inputs to draft legal documents that are closely related to the Company's activities, participating in seminars, coordinating with peers and members of professional associations to comment on law making process, summarizing problems arising from the application of current regulations to report to competent state agencies and propose feasible solutions.

The Company's internal procedures and regulations must be reviewed by the Legal Department as well as regularly examined and revised for suitable amendments and adjustments to changing laws.

Most members of the BOD, SB and managers of the Company have participated in corporate governance training courses for public companies.

Compliance is a criterion in the professional code of ethics of the Company that the entire BOD and employees have committed to.



The Company provides services in the financial sector, without material use of natural resources, therefore environmental risk exposure is negligible.



In 2017, the company's risk management system was fundamentally completed with the addition and updating of several risk management policies and procedures for each specific risk area, along with upgrading of the risk monitoring and warning systems.

In 2018, risk management activities will be further enhanced with the development of a risk management system in line with international standards as well as business practices of SSI. In addition, the improvement and updating of risk management policies and procedures continues to be implemented.

With strong growth in personnel size as well as network of branches and customers, along with new products such as derivative securities, the Company is facing more operational risk-related issues, especially those prompted from human and system. The strong growth of the securities market in 2017, fueled by the momentum of growth in 2018 also elevates market risks, possibility leading to strong corrections across the market or in specific stock groups or industries. Higher market risk will lead to credit risk related to margin lending and derivative trading.

Therefore, 2018 to focus on improving the effectiveness of risk management with the implementation of risk management training for all employees to enhance risk management culture, for each employee is to serve as a risk management agent in each of their operation. In addition, strengthening of market surveillance and regular assessment of market risks, concentration of outstanding loans related to margin lending activities in order to make timely adjustments are also implemented. At the same time, the Risk Management Department will coordinate with Business Units to develop a risk category, risk prevention and mitigation measures for each Division and continuous action plans for each division as well as for the whole Company.

In 2018, with the addition of warrants in the security market, completion of risk management for warrant underwriting will also be a focus.

Challenges in the implementation of risk management activities

In order to achieve sufficient risk management, it is necessary to be accurate and effective in identifying, measuring, monitoring, warning and handling risks, along with awareness building at all levels from management to employees on the importance of risk management and each member's initiative to engage in risk management activities of SSI.

Because risk management is a new field in Vietnam as well as a growing field in the world, there remain issues with inconsistent and changing definitions, limited risk measurement models, and inadequate awareness on the importance of risk management activities across majority of the work force. Therefore, risk management activities to encounter the following difficulties:
  •  Measuring risks using the quantitative method requires the use of historical data. However, at present, the data source is either very limited or unavailable, making the use of quantitative risk measurement to be challenging, inaccurate or unfeasible. In addition, quantitative risk measurement models themselves have limitations and vary in approaches. For instance: The Value at Risk (VaR) method can help to measure maximum loss at a specific level of confidence over a period of time. However, when a risk is outside of the confidence level, the maximum loss cannot be defined and often is very large. In addition, VaR also has a variety of measurement methods depending on specific conditions, requiring users to have experience for appropriate measurement application.
  •  Current software systems supporting risk measurement require very high investment costs that only large banks or financial corporations in the world can reach the scale to attain meaningful cost effective use. As a result, certain semi-manual calculations remain in use.