Standard Chartered: Integrating Risk into Corporate Strategy

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Introduction

The UK-based banking group, Standard Chartered (Stanchart) operated primarily in Asia, with growing operations in the Middle East, Africa, and Latin America. In all it had more than 500 offices in over 50 countries. Stanchart offered a range of consumer banking and institutional banking services. It had taken advantage of the Asian financial crisis of the late 1990s to buy up operations in Indonesia and Thailand. The bank had also moved into China. Stanchart had positioned itself as an independent, medium-sized group focusing on emerging markets, where it attracted business from the local operations of Western companies.

It also offered indigenous businesses and consumers a stable alternative to sometimes unreliable local banks. Private investor Khoo Teck Puat owned about 15% of the company while the UK based insurance company, Prudential plc had a 5% stake. In 2002, Stanchart recorded sales of $6,933.0 million and a net income of $191.0 million.

Risk was inherent in Stanchart's business. The Group had identified eight core risks. Credit, market, country and liquidity risk arose directly through the Group's commercial activities whilst business, regulatory, operational and reputational risks were a normal consequence of any business undertaking. The bank believed the risk functions had to operate as an independent control working in partnership with the business units...

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