To help manage risk across our strategies, we take a disciplined approach to risk management. Our Chief Investment Officer oversees key investment team functions through regular meetings and one-on-one interaction with portfolio managers and investment group leaders. Portfolio managers understand material risks in portfolios through in-depth analysis and proprietary research into our investee companies.
Additionally, our Global Head of Risk and Compliance serves as chair for our Enterprise Risk and Compliance Committee (ERCC).
The purpose of the ERCC is to assist the CEO and senior management in the oversight of the Company’s risk management framework, including the strategies, policies, procedures, processes, and systems established to identify, assess, monitor, and manage the major risks facing the Company, including regulatory and compliance risks.
As part of the ERCC, we have an Investment Risk Sub-Committee (the “IRC”). The purpose of the IRC is to assist the Executive Committee/CEO in the identification, review and monitoring of investment risks to client portfolios (including market, liquidity, diversification, credit, interest rate, derivative and other risks). The IRC is not a policy or investment decision making body. Determination of internal investment guidelines, risk budgets or other investment policies, as well as supervisory authority over investment decision making, resides with the CIO subject to direction by the CEO.
Third party ESG ratings and reputational risk reports have been integrated into our internal Risk Management frameworks.
CORPORATE GOVERNANCE AND STEWARDSHIP SUB-COMMITTEE ("CG&S") OVERSIGHT
The CG&S Sub-committee was established in 2019 to oversee matters related to corporate engagement, in particular stewardship and active ownership that pertain to Matthews Asia portfolio holdings. In addition, the Sub-committee was created to promote stewardship, integration of environmental, social and governance (ESG) factors into the investment process (ESG Integration), and to assess and advise on methods to mitigate any regulatory, reputational, legal and operational risks that may arise from decisions, actions, and representations with respect to corporate engagement. The Sub-Committee reports to the ERCC and is comprised primarily of investment team members, but also includes representatives from legal, compliance, client services and operations departments.