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An Enterprise Risk Management Framework guides how organizations in Hong Kong identify, assess, and handle business risks across all operations. It sets out clear processes for managing everything from market fluctuations and regulatory changes to operational disruptions and compliance requirements under the Hong Kong Exchange's Corporate Governance Code.

This structured approach helps boards and senior management meet their oversight duties while protecting stakeholder interests. Companies use it to create consistent risk policies, define risk appetite levels, assign clear responsibilities, and ensure proper reporting channels - all vital for listed companies and financial institutions under the Securities and Futures Commission's supervision.

Use an Enterprise Risk Management Framework when your Hong Kong organization faces complex risks that need systematic handling. This becomes essential during major changes like expanding operations, entering new markets, or dealing with increased regulatory scrutiny from the SFC or HKMA.

The framework proves particularly valuable during board-level strategic planning, merger discussions, or when preparing for IPO listing requirements. It helps finance teams spot emerging risks early, supports compliance officers in meeting regulatory obligations, and gives senior management a clear structure for risk-based decision making - especially crucial for regulated entities under Hong Kong's twin-peaks regulatory model.

• Basic Compliance Framework: Focuses on regulatory requirements from the SFC and HKMA, ideal for smaller firms and startups
• Comprehensive Corporate Framework: Covers strategic, financial, and operational risks, typically used by listed companies on HKEX
• Financial Services Framework: Specialized for banks and insurance companies with enhanced controls for market and credit risks
• Digital Enterprise Framework: Emphasizes cybersecurity and technology risks, popular among fintech and digital businesses
• Group-Level Framework: Designed for conglomerates operating across multiple sectors, with parent-subsidiary risk coordination

• Board of Directors: Approves and oversees the Enterprise Risk Management Framework, ensuring it aligns with corporate strategy
• Risk Committee: Develops and reviews framework details, monitors implementation, reports to the board
• Compliance Officers: Ensure the framework meets SFC and HKMA requirements, maintain documentation
• Department Heads: Implement framework controls within their units, report risks up the chain
• Internal Auditors: Test framework effectiveness, recommend improvements, provide independent assurance
• External Stakeholders: Including regulators, shareholders, and rating agencies who rely on framework disclosures

• Risk Assessment: Map out your organization's key risks across operations, finance, compliance, and strategy
• Regulatory Review: Gather current SFC, HKMA, and HKEX requirements affecting your business sector
• Stakeholder Input: Collect feedback from department heads on operational risks and control measures
• Resource Evaluation: Assess available staff, systems, and budget for framework implementation
• Documentation Needs: List required policies, procedures, and reporting templates
• Approval Process: Define clear review and sign-off procedures for risk decisions
• Implementation Plan: Create timeline for staff training, system updates, and framework rollout

• Risk Governance Structure: Clear definition of board and management responsibilities under HK Corporate Governance Code
• Risk Appetite Statement: Specific risk tolerance levels aligned with business objectives
• Risk Assessment Process: Methodology for identifying, measuring, and prioritizing risks
• Control Mechanisms: Detailed internal controls and risk mitigation procedures
• Reporting Framework: Regular reporting requirements to board and relevant committees
• Compliance Section: References to relevant HK regulations and compliance obligations
• Review Process: Procedures for periodic framework assessment and updates
• Crisis Management: Emergency response and business continuity protocols

An Enterprise Risk Management Framework is often confused with a Risk Management Policy, but they serve distinct purposes in Hong Kong's regulatory landscape. While both deal with risk oversight, their scope and application differ significantly.

• Scope and Authority: The Framework provides the overarching structure for all risk management activities across an organization, while a Policy outlines specific rules and procedures for handling particular risk types
• Implementation Level: The Framework operates at a strategic level, guiding board decisions and corporate governance, whereas the Policy functions at an operational level with detailed guidelines
• Regulatory Alignment: The Framework must align with HKEX's Corporate Governance Code and broader regulatory requirements, while Policies focus on department-specific compliance needs
• Review Cycle: Frameworks typically undergo annual board-level reviews, while Policies may be updated more frequently as operational needs change