We adopted the three lines of defense model for risk management and internal control, and continue to enhance the model's effects. In 2019, the audit used the three lines of defense as the direction for future optimization of the group, and offered recommendations for business units, management units, and audit units. Units on the second and third lines of defense continue to strengthen internal risk management. Besides publishing monthly law, risk and audit periodicals, sharing information of relevant issues and actual cases of regulatory compliance, risk management and auditing, units conduct compliance and internal control self-evaluations and self-inspections every six months, in order to identify potential risks of each unit and verify that operations are in compliance with related systems. Units are required to implement improvement measures for non-compliant matters.
The Board of Directors and management of Cathay FHC are required to take corporate governance or risk management courses to raise the risk awareness of all employees. All employees in the group are also required to take general education courses on risk management. Training completion rate reached 100% in 2019, and a variety of risk training courses are provided to different subjects based on the business of each subsidiary, so that employees are able to effectively control risks.
We have included a “risk management” indicator in the criteria of Board and functional committee performance evaluation to increase a sense of responsibility in the Board of Directors towards risk management. Meanwhile, Cathay FHC also has included internal control implementation results and compliance implementation results among the categories of performance management development (PMD) for managers and all employees, so as to maintain effective operation of the risk management system.