atelier / workshop b1 a focus on vietnam - amrae of vietnam ... legal & business environment ......

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Atelier / Workshop B1 A focus on VIETNAM

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Intervenants

Modérateur

Jens Wolhlthat Board Member & International Director

Danh Duong Thanh Board of Directors Member & Head of Audit & RM Committee

Franck Baron

Atelier B1 – A focus on VIETNAM

Philippe Robineau Board Member & Managing Director

Ly Xuan Thu Head of Risk & Compliance

Board Member

Chairman Group General Manager Risk Management & Insurance

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Content 1. Introduction to Vietnam: economics, legal and business environment 2. The Insurance Market in Vietnam 3. The risk culture in Vietnam: A broker’s perspective 4. The risk culture in Vietnam: A risk manager’s perspective Q&A

Atelier B1 – A focus on VIETNAM

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Introduction

2nd largest

european

investor

(3.1 Billion

in 2012) 3rd

Economic

Partner

Members

of the OIF 110.000 Vietnamese speaks French

• 17th century - a jesuit mission (Alexandre de Rhodes)

• 18th century - economic and military involvement (etablishment of the Nguyen dynasty)

• 19th century - strong military involvement to protect catholic missions.

• 1887 creation of the french colony « Indochine Francaise ».

• Until the French defeat in the « guerre d'Indochine » and the independance of Vietnam proclaimed in 1954.

http://fr.wikipedia.org/wiki/Guerre_d%27Indochine



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Introduction

Well located in Asia,

Fairly rapid

expansion,

Increasingly

attractive to business

investment

The ASAEAN (Association of Southeast Asian Nations) / ASEAN Economic Community: infrastructure development, tariff elimination and improved capital and labor mobility.

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Introduction to Vietnam:

Economics, legal & business environment

CONTENT: I. Vietnam at a glance under economical and legal

aspects II. Economics - Facts & Figures - Vietnams socio-economic plan for 2014 III. Challenges for Vietnam under economical and

legal aspects in 2014

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I. Vietnam at a glance under

economical and legal aspects

Vietnam is a socialist-oriented market economy, even though a vibrant, resilient and

dynamic market.

Population: Approx. 90 Mio. inhabitants - Quite young population!

Vietnam had a strong Gross Domestic Product (GDP) growth over the past years.

Vietnam has been in the past years since 2009 one of the 15 most attractive economies in

the world for Foreign Direct Investment (FDI)

Vietnam is rich in natural resources ( e.g. bauxite, nickel, copper, gold, tungsten, coal, oil &

gas).

Sectors in focus are primarily : Energy, Infrastructure, Retail, Real Estate.

Vietnam is an export-led growth economy. Exports made up almost 89% of its GDP in 2011

(Major goods for exportation are e.g. coal, textile & sewing products, footwear, fishery

products, electronic goods & parts, rice, rubber, coffee).

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Vietnam is a WTO ( World Trade Organization) member.

According to a WTO analysis of the liberalization of market access in Asian

countries: Typical restrictions of market access such as limited number of

opened sectors are LOW in Vietnam and Singapore/ MEDIUM in Malaysia,

Indonesia, Thailand, Philippines, China / HIGH in India and Myanmar.

In principle, Vietnam‘s legal framework is considered investor – friendly and one

of the most liberal one‘s in Asia.

Current situation in Vietnam has the potential to ease M & A aspirations:

- Vietnamese Government is committed to equitization (privatization) of

thousands of State – Owned Enterprises (SOEs).

- Current economic difficulties in Vietnam led to financial exhaustion of local

companies. Foreign capital (FDI) to weather the storm is badly needed.

I. Vietnam at a glance under

economical and legal aspects

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II. Economics

Facts & Figures

• Development of Vietnam‘s Gross Domestic Product (GDP) in past years:

2007: 8,5%

2008: 6,3%

2009: 5,3%

2010: 6,8%

2011: 5,8%

2012: 5,03% (13 year low!)

2013: 5,42%

• Consumer Price Index (CPI/ Inflation) in 2013: 6,04%

Note: The inflation has been brought under control! The 2013 CPI is the lowest

rate in a decade after having had a CPI of more than 18% in 2011!

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II. Economics

Facts & Figures

• In 2013, Foreign Direct Investments (FDI) of almost USD 22 billion were attracted (consisting of approx. 1.200 new projects from 54 countries and permitted 450 ongoing projects)

Note: This has been an increase of almost 55% in comparison to 2012! Target as set for FDI 2013 has been: USD 13 - 14 billion.

Foreign key investors are: (1) Japan (2) South Korea, with Samsung as biggest foreign investor (3) Taiwan and (4) China

• Average annual salary per Vietnamese worker in 2013: ca. USD 1.960 per worker

2012: Annual salary per worker has been 27% less per capita

1992: Annual salary per worker has been USD 140.- (= 14 times less as in 2013)

• Current insurance penetration/ insurance density in Vietnam: approx. 1,6%

• Conclusion: In light of the young population of Vietnam, there is a huge potential in particular for retail insurance & life insurance products in the upcoming years!

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II. Economics

Vietnams socio-economic plan

2014

The Vietnamese National Assembly approved the following targets for 2014 to

create more macro-economic stability and to curb inflation:

Gross Domestic Product (GDP): 5,8%

Consumer Price Index (CPI) Increase: 7%

Increase of export turnover: 30%

Excess of imports over exports: 6%

Total investment for social development: approx. 30% of GDP

Poverty reduction: 1,7% to 2%

Goal is to create 1,6 Mio. new jobs

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III. Challenges for Vietnam under

economical and legal aspects in 2014

4 of the biggest challenges for Vietnam in 2014 are:

• A) Restructuration & consolidation of the poorly performing bank sector

• B) To pursue restructuration of State-Owned Enterprises (SOEs)

• C) Legal reforms to better attract and manage Foreign Direct Investments and

to support domestic Small Medium Enterprises (SMEs)

• D) Successful conclusion of the Trans- Pacific Partnership (TPP)

Restructuration & consolidation of poorly performing bank sector:

• Government completed equitization of 4 state owned commercial banks.

• A state owned company (Vietnam Asset Management Company) was established to

purchase bad debt from banks to clear their books and took over in 2013 already

USD 1,6 billion of bad debts.

• Foreign investors shall be allowed to hold larger stakes in domestic financial institutions in

2014 up to 20% (current limitation: 15%).

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To pursue restructuration of SOEs:

• Currently, Vietnam has 1.400 SOEs.

• Debts owed by the state sector (i.e. by the SOEs) in 2012: USD 64 billion = almost 50% of Vietnams GDP.

• Goal, as stated during a conference in Hanoi in Dec. 2013 from Mr. Hoang Trung Hai (Deputy Prime Minister): 600 SOEs in 2015. 300 SOEs in 2020.

• The Deptuy Prime Minister did also announce further activities to ban corruption and punish officials being corrupted.

• Electricity, Energy and Mines Sector shall however remain with dominant shareholding by the Vietnamese Government.

Legal reforms to better attract and manage Foreign Direct Investments (FDI)

and to support domestic SMEs:

• Vietnam is working on amendments of the Investment Law and Enterprise Law to better attract and manage Foreign Direct Investments.

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• A new Employment Law (first of its kind to rule employment related matters) shall be enforced as per January 1, 2015.

• Deputy Prime Minister emphasized that progress has to be made concerning fair competition for all companies (not only providing privileges for SOEs).

• Domestic SMEs shall receive better access to capital.

Successful conclusion of the Trans-Pacific Partnership (TPP):

• A huge step forward for an export driven country like Vietnam would be the conclusion of a trade agreement such as the TPP pact in 2014.

• The TPP is currently consisting of the following 12 members: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, USA and Vietnam.

• If successfully concluded, the TPP pacts stands for roughly 40% of the world‘s GDP and 1/3 of the world‘s trade volume.

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6th February 2014

PVI Insurance No.1 Industrial Insurer in

Vietnam

2. The Insurance Market in Vietnam

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Vietnam insurance market at a glance Challenges to the insurance market

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Economic recession, pressure on capital a number of Vietnamese corporations in

general and particularly in financial sector have to take restructuring action seek for

strategic partners to access to capital leverage M&A activity.;

M&A continues to be a increasing trend in Vietnam in the upcoming years, and

Insurance industry is not an exception

The entry of the foreign insurers into the domestic market create more difficulties to the

local insurers;

The increase in market capacity has led to fierce competition for business and rate

reductions in many classes;

Economic and regulatory challenges;

Effects of climate changes and potential catastrophic losses in Vietnam.

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Vietnam insurance market at a glance Regulatory and legal environment

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Insurers operating in Vietnam face a range of economic and regulatory challenges. However, the recent and anticipated regulatory changes will lead to

stronger insurers and more structured governance of the insurance sector.

December 18, 1993: Decree No.100/CP authorized the

formation of insurance enterprises other than state- owned

enterprises

December 9, 2000: the Law on Insurance Business

developed a comprehensive approach generally

applicable to the insurance business

November 24, 2010: Law 61/2010/QH12

amended and supplemented some parts of the

Law on Insurance Business December 2011: the issuance of Decree

No. 123 confirmed that foreign

enterprises may open non- life branches

in Vietnam

1993: Insurance was began to be recognized as

business activity, and subjected for business

regulations

1 January 2008 abolished the limitation of 100% foreign

invested insurance enterprises from providing statutory

insurance services

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According to Resolution No.26/NQ-CP dated 09/07/2012, up to 2015, State-owned-enterprises and Corporations

have to complete the divestments on their non-core business sector. Divestments goes with restructuring process,

particularly in real estate, banking, finance and insurance industry.

Decisions No.1826/QD-TTg dated 06/12/2012 of PM has approved the “Restructure security market and insurance

enterprises” Project to enhance financial competency, corporate governance, risk management and services quality.

Capital requirement: change from Solvency Margin to Risk-based Capital concerning the risk ratio in every strategic

decisions to provide better management of capital.

Vietnam insurance market at a glance

Regulatory and legal environment

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Vietnam insurance market at a glance Compulsory insurance

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Motor Third party liability

Aviation third party passenger liability

Professional indemnity for lawyers, architects, engineers, securities companies (stockbrokers), notaries,

auditors, fund management companies, insurance brokers and contractors supervising the execution of

building works.

Fire and explosion insurance on 16 different types of high-risk industries.

Employers’ liability insurance in respect of construction works.

Insurance for contractors performing surveys for construction work and performing supervision of the

construction.

A guarantee covering construction tenders presented

Environment impairment insurance for vessels carrying oil and gas and dangerous goods in Vietnamese

waters

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Vietnam insurance market at a glance Non- admittance to foreign insurers

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Since January 2007 when Vietnam officially became a member of WTO, foreign insurers

have been allowed to provide insurance into Vietnam, with limit to the following conditions

according to the Decree 123/2011/ND-CP of the Vietnamese Government :

Total assets equivalent to a minimum 2 billion USD;

Minimum credit rating of BBB+ (by S&P/ Fitch) or B++ (by AM Best) or Baa1 (by

Moody’s);

Have been profitable in the consecutive three financial years.

According to Article 6 of the Law on Insurance Business providing the basic

principles of insurance business states that “Organizations or individuals having the

demands for insurance may only buy insurance from insurance enterprise authorized

to operate in Vietnam”.

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Vietnam insurance market at a glance Admittance to foreign insurers

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ADMITTED

Conditions for granting license for

establishment and operation of

foreign insurers in Vietnam:

Enterprise has been legally operating for

at least 10 years pursuant to regulations

of the country where it has its head office;

Total assets equivalent to a minimum 2

billion USD in the prior year;

Has not committed a breach of the law on

insurance and other related laws;

Required legal capital of 300 billion VND

for non- life insurance business and of

600 billion VND for life insurance

business.

NON- ADMITTED

Enterprises with foreign- invested capital;

Foreigners working in Vietnam;

Reinsurance services;

Insurance services in international transport and

commercial aviation;

Insurance broking and reinsurance broking

services;

Consultancy, actuary, risk assessment and claim

settlement.

Non- admitted business may only be

placed through brokers licensed to

operate in Vietnam.

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Vietnam Non-life Insurance market Estimated as at 31st December 2013

1

• 29 Insurance companies, 2 Reinsurance companies and 11 brokers

2

• Bao Viet, PVI Insurance, Bao Minh, PJICO and PTI remain 05 biggest players with 68.3% market share

3

• 2 Insurance companies (PVI Insurance and Samsung Vina) and 2 Reinsurance companies (PVI Re and Vina Re) are rated by A.M. Best

4 • Total direct insurance income ~ $1.14bn

5 • Average loss ratio: 44.8%

6 • Average growth: 5.4% compare to 2012

Consolidated figures: Exchange rate (USD/VND): 21,100

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Source: Association of Vietnamese Insurers (AVI)

Growth in market share since inception

The local market remains dominated by five major players (i.e. PVI Ins, Bao Viet, Bao Minh, PJICO and PTI). In which, PVI Insurance is nº1

Corporate insurance company in Vietnam

Vietnam Non-life Insurance market

As at 31st

December 2013

PVI Ins21.2%

Bao viet22.8%Bao minh

9.7%PJICO8.2%PTI

6.4%

Samsung Vina4%

Others 27.7%

Vietnam non-life market share in 2013

4.2% 11.5% 13.0% 18.3% 19.7% 18.6% 20.3% 20.6% 20.5% 20.5% 21.2%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

1996 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

PVI Ins Others

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PVI Insurance remains dominant over certain industrial insurance lines with diversified industrial client base

Energy Marine Engineering , Property & Casualty

Industrial Insurance lines

PVI Insurance

100%

Source: Association of Vietnamese Insurers(AVI)

PVI Insurance;

40,01%

Bao viet; 23,79%

Bao minh; 9,54%

PJICO; 10,40%

PTI; 2,05%

Others; 14,22%

PVI Insurance;

44%

Bao viet; 10% Bao minh;

5%

PJICO; 4%

PTI; 3%

Others; 34%

Vietnam Non-life Insurance market

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Vietnam Life Insurance market As at 31st December 2013

1

• 16 Insurance companies and 232,024 agents

2

• Prudential, Bao Viet, Manulife, Daiichi remains 04 biggest players with 69% market share

3

• Total Annualized First Year Premium for 2013 ~ $335.5 mil

4

• PVI Sun Life established in June 2013 is nº3 with 14.30% market share behind Prudential (21.67%) and Bao Viet (21.44%) for 2013 AFYP

5 • Average premium per contract: ~ $380

6 • Average AFYP growth: ~34% compare to 2012


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Source: Association Vietnam Insurance (AVI)

The local market remains dominated by six major players (i.e. Prudential, Bao Viet, Manulife, Daiichi, AIA and ACE Life. In which, PVI Sunlife newly

established in June 2013 is targeting to be among top 5 by 2015

Vietnam Life Insurance market

As at 30th

September 2013

Market share in Life insurance

Prudential; 25,20%

Bao Viet; 23,19%

Manulife; 12,53%

Daiichi; 8,10%

AIA; 6,86%

ACE Life; 5,21%

Others; 18,91%

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PVI Holdings

(formerly known as PVI) in brief

1 • Established in 1996

2 • Owners’ equity: 288.15m USD

3 • Total Asset: 544.54m USD

4 • Total staff: 1,929

5 • A.M.Best ratings B+ 2013 (Positive) for PVI

Insurance and for PVI Re

6 • Independence Medal Award (17.12.2013)

7 • Strategic partner – Talanx

(Parent company of Hannover Re & HDI Gerling)

Capital Contribution

PetroVietnam; 35,50%

Hdi Gerling; 31,82%

OIF; 11,58%

PVcomBank; 6,23%

Others; 14,87%


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Major shareholders

PetroVietnam The largest and most powerful economic

group in Vietnam.

OIF A wholly owned investment arm of

Oman Government, who manages a

diversified direct investment portfolio.

Talanx Group The 3

rd largest insurance group in Germany and

the 8th

largest insurance group in Europe. O

IF

(11.5

8%

)

PetroVietnam

(35.5%)

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PVI current structure

In 2011, PVI has successfully transformed from one single insurance entity into a financial and insurance group, which includes a parent

company, two insurance and reinsurance subsidiaries, a life insurance joint venture and a fund management company…

PVI Holdings

Market leader in non-

life insurance in

Vietnam

Close ties with many

Vietnam industrial

companies

Independent

reinsurance company,

one of two existing

licenses in Vietnam

Strong support from

Talanx/PVI/ PVN

Leverage resources

from PVI/ PVN

Cross-selling to

employees of industrial

clients

Manage cash flows and

investments of PVI

Group

Leverage investment

opportunities in PVN

Group

PVI Insurance PVI Reinsurance PVI Sun Life PVI Capital

Existing

To-be-established

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PVI Insurance …In which, PVI Insurance is a wholly owned subsidiary who inherits all rights and obligations of the former PVI related to its non life

insurance businesses.

Insurance

Oil and Gas Insurance

Marine Insurance

Engineering Insurance

Property Insurance

Liability Insurance

Aviation Insurance

Motor Vehicle Insurance

Voluntary Medical Insurance

Medical Expenses and Emergency

Insurance

Agriculture Insurance

Others

Reinsurance

Inward Reinsurance

Outward Reinsurance

Insurance services

Risk Management Consultancy

Survey, Inspection, Loss Adjustment

Claim Compensation & Subrogation Market leader in non-

life insurance in

Vietnam

Close ties with many

Vietnam industrial

companies

PVI Insurance

Majo

r li

nes o

f b

usin

esses

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PVI Insurance Our international network

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Through the strategic partnership between PVI Holdings and Talanx Group, the 3rd largest insurance Group in Germany, PVI has

formally participated in global service position.

Talanx Group has offices in 150 countries around the world;

The Group companies are active under various brand globally;

HDI- Gerling is currently offers insurance services abroad over 36 countries through primary insurance units

of Talanx Group.

PVI Insurance is a very important Vietnamese partner to large international reinsurers and markets, such as Hannover Re,

Lloyd’s, Munich Re, Swiss Re.

Currently, PVI is the only local insurer to accept foreign risks including risks in Singapore, Malaysia, Japan, Russia and new

markets such as North Africa, Latin America.

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Diverse and high-quality customer base

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Technip

Consotium

Nippon Oil MODEC

ConocoPhillips

BP

Chevron

Petronas

Talisman Energy

KNOC

Multinationals/ NOCs

PetroVietnam

EVN

VINACHEM

Vietnam Airlines

Service Flight Corporation

Coal & Mineral Group

Gazprom

Zarubezhneft

Uzbeneftegar

Idemitsu Oil & Gas

Sumitomo

Huyndai E&C

Posco E&C

Government/ public sector Multinationals/NOCs

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Gras Savoye in Vietnam, pioneering the Brokers’ Market • Starting a representative office in 1993, Gras Savoye has

been the first 100% foreign Broker installed in Vietnam • April 2013, Gras Savoye Willis Vietnam celebrated its 20

years of presence in Vietnam • 2014, we are a leading player in Vietnam with offices in Ho

Chi Minh city and in Hanoi

3. The risk culture in Vietnam: A broker’s perspective

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Snapshot at GSW Vietnam • From a start up to a 140-person group, combining 5

nationalities and 2 companies in Vietnam • Market leader in arranging Liabilities, Business

Interruption, Construction and Employee Benefits insurances ; as well as specialised in tourism, banking and manufacturing industries

• We focus on Risk and Quality placement, and believe in Execution


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Risk Culture, history and experience • Where insurance comes from ? the oldest existing example

of an insurance contract, dated 23 October 1347, is a marine cargo insurance from Genoa in Northern Italy

• When did modern insurance started in Vietnam ? 1963 the state-owned Bao Viet was established in the north, principally to cover marine cargo risks; 1993 with the decree No 100/CP, heralding the development of a modern insurance market

Young industry as well as a new culture based on 50

years of experience and 25 years of Market Economy


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Risk Culture, 20 years of change • Risk is traditionally understood in Vietnam, however

generally self insured • Corporate Risks are not all well identified and segmented

• The economic transition to Market Economy has pointed

out the need to protect Corporate assets and the P&L • The rapid development of Private Investment has been

fuelling the non life insurance market development


37


Insurance Market

Growth (%) 2005 2006 2007 2008 2009 2010 2011 2012

Cambodia 12% 44% 19% -3% 24% 19% 21%

Laos 122% -30% 69% -18% 26% 49%

Thailand 13% 6% 5% 3% 20% 15% 27%

Viet Nam 16.10% 16.72% 28.27% 33.30% 25.63% 24.11% 20.41% 11.16%

GDP Growth

(annual %) 2005 2006 2007 2008 2009 2010 2011 2012

Cambodia

13.25%

10.77 %

10.21%

6.69 %

0.09%

5.96%

7.07 %

7.26 %

Laos

7.11 %

8.62 %

7.60 %

7.82 %

7.50 %

8.53%

8.04 %

8.20%

Thailand

4.60 %

5.09 %

5.04 %

2.48%

(2.33) %

7.81%

0.08 %

6.49 %

Viet Nam

7.55 %

6.98 %

7.13 %

5.66 %

5.40%

6.42 %

6.24 %

5.25%

Source: World Bank

Growth compared in Vietnam, Thailand, Laos and Cambodia

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Premium per

capita ($US) 2005 2006 2007 2008 2009 2010 2011 2012

Cambodia

0.81

0.89

1.27

1.48

1.42

1.73

2.03

2.43

Laos

1.49

3.24

2.23

3.68

2.97

3.67

5.35

Thailand 38.65 43.39 45.76 48.20 49.81 59.77 68.79 86.96

Viet Nam

4.23

4.94

6.20

7.95

9.14

10.38

11.44

12.44

Vietnam compared

Insurance penetration (GWP/GDP) Average Premium per Capita

Market

Penetration 2005 2006 2007 2008 2009 2010 2011 2012

Cambodia 0.17% 0.17% 0.20% 0.20% 0.19% 0.22% 0.23% 0.26%

Laos 0.31% 0.55% 0.32% 0.42% 0.32% 0.33% 0.42%

Thailand 1.40% 1.40% 1.20% 1.20% 1.30% 1.20% 1.30% 1.60%

Viet Nam 0.60% 0.62% 0.67% 0.68% 0.74% 0.78% 0.74% 0.71%

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Risk in Vietnam, areas of concern • Cat. Risks : Flood, Typhoon • Pol. Risks : Concession • Property : Fire, Construction, others … • Liabilities : emerging Liabilities such as D&O, PI,

Product


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Natural Hazards:

Vietnam is exposed to typhoons and tropical storms moving from the East Sea which are

regular occurrence between the months of July and November (typhoon season) each year.

These storms are usually accompanied by extensive flooding and it is not unusual for rail and

road links to be cut and flight schedules to be disrupted.

41 41


Flooding is a common occurrence in Vietnam and normally follows as a result of

typhoon activity. Some of the most important recent events are shown below.

42

How the Corporate Sector addresses Risk ? • Cat. Risks : Surveys / Insurance Risk Transfer / Self

Insurance • Pol. Risks : Self Insurance • Property : good 24/7 presence on site, Insurance

Risk Transfer, limited Risk Management • Liabilities : Self Insurance / Insurance Risk Transfer


43

Risk Culture, Imported Risk Management • Quick learners have integrated RM from Foreign

Corporations

• RM requirements from foreign Lenders / Partners /

Clients have influenced Vietnamese Companies

behavior

• Legal and Compliance requirements to the Banking

Industry are developping a Risk Management culture


44

How Brokers influence the Risk Culture in Vietnam ? • Participate actively to matching Risk Exposure and

Insurance Solutions • Importing international solutions to local Corporations • Providing innovative answers to New Local Risks • Assistance in the transition from insurance purchasing to

Risk Assessment, and then to Risk Management, in Providing Risk Consulting


45

The Challenge

• No formal guidance on risk management from the authorities as well as in the standards

• Disconnection for the vietnamese enterprises between risks management and insurance; the risk management is limited to legal and compliance risk


46

Conclusion • New Culture vs. Emerging Risks, Insurance is 20 years old

while market economy started 25 years ago • No clear guidance and framework for Risk Management,

but rather good local practice • Disconnection between Risk Assessment and Insurance

purchase • Brokers re-connect Risk and Cover, through Risk Profile

and insurance coverage explanation • Foreign Coporations bring to Vietnam an imported Risk

Culture


47

1. Enterprise Risk Management Framework We focus only on listed companies in Vietnam across industries: -Financial Services Sector: some have ERM framework in place (ACB, HSC, PVI) - Non – Financial Services Sector: Vinamilk - Maturity level: low to medium - ERM framework is run manually - Not familiar with ERM standard eg ISO 31000, COSO ERM, risk professional (risk manager, chief risk officer)

4. The risk culture in Vietnam: A risk manager’s perspective

48

2. Risk Governance - Most of companies does not have Board Risk Committee, Executive Risk Committee to oversee risk management practice - Poor corporate governance practices often have poor risk management skills and vice versa - Most of companies does not have risk management function and risk manager or execute as leading practice - ERM definition is new toward companies and don’t know how to run risk management process systematically with a holistic and integrated approach - In a certain degree risk management is run with a silo approach and poor risk culture


49

3. Current Stage of RM in Vietnam Challenges: - More complicated laws and regulations - Unstable global and local economic environment - High expectation from consumers for quality of goods and products with competitive price - Tough competition from multinational companies in Vietnam - Challenges from being a member of Trans-pacific Agreement (TPP)

Insufficient investment in risk management leading to business failure from root causes:


50

3. Current Stage of RM in Vietnam (cont’d) - Imbalance between risk and return for investment and development projects - Do not have Planning, Budgeting and Forecasting process in place - High liquidity risk when accept loans are key for capital expenditure - Supply chain risk is extremely high - High NPL in banking sector


51

4. Future perspectives of RM in Vietnam -Implementation of ERM framework at listed companies as a requirement by law - Have a robust ERM program with higher maturity level of risk management - Risk Management is a key component of good corporate governance and risk governance - Understand and recognise the important role of Risk Manager and Chief Risk Officer in Enterprise Risk Management process - Respect the three lines of defense in risk governance process (Business Risk Owners, Risk Management and Internal Audit)


52

Happy Lunar New Year 2014. Year of the Horse.

53

TITRE

Merci Les slides seront en ligne dès

la semaine prochaine sur www.amrae.fr

atelier / workshop b1 a focus on vietnam - amrae of vietnam ... legal & business environment ......

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