Page 14 - CDIC Company Profile Ebook

Principal Operations

Deposit insurance Financial stability

2. Risk management

(1) Financial early-warning system
In order to control the risks of insured institutions' financial and business
operations in a timely manner, the CDIC monitors financial institution
call reports, operates the National Financial Early-warning System, and
has strengthened information sharing and cooperation with other financial
supervisory authorities. These measures help the CDIC to track the risks
facing insured institutions, and to act in a timely manner in responding to
abnormal alerts and providing the competent authorities with information
useful in the process of policymaking on financial supervision. In this manner,
the CDIC seeks to prompt insured institutions to lower their overall risks.

(2) Management of insured risks
The CDIC has an account officer system, under which account
officers use enhanced early-warnings, off-site audits, online monitoring,
and other such off-site monitoring operations to analyze the business
and financial conditions of insured institutions in a timely manner. In
addition, in order to support the supervisory policies of the competent
authorities, the CDIC has strengthened the monitoring of specific-risk
businesses and, if an insured institution's business operations are found to
have deteriorated significantly enough to threaten the interests of
depositors, the CDIC exercises guidance or superintendence of the insured
institution in accordance with the Banking Act. Where necessary, the
CDIC will issue a warning notice of possible termination of the deposit
insurance agreement, or will advise the insured institution to terminate
the deposit insurance agreement.

Besides, in response to changes in the financial environment and
fintech developments, the CDIC continues to strengthen its insured risk
control measures and actively plays the role of a risk minimizer in order
to safeguard depositors’ interests and maintain financial stability.

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