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3


2019/20

Managing the Portfolio

GIC's investment strategy is to build a portfolio comprising asset classes that generate good long-term real returns, while adhering to the Client's (the Singapore Government) risk parameters.

3.1

Overview: Our Portfolio and
How We Manage It

Our mission is to preserve and enhance the international purchasing power of the reserves placed under our management by delivering good long-term returns above global inflation.

In 2013, we established an investment framework that enables us to navigate an increasingly complex and challenging investment environment. This framework leverages GIC’s strengths, including our long investment horizon, significant capital pool, global reach, best-in-class capabilities, and robust governance structure.

GIC’s investment framework

Policy Portfolio · Six core asset classes, or ‘beta’ · Diversified sources of long-term real returns Active Portfolio · Multiple active strategies, or ‘alpha’ · Diverse sources of skill-based excess returns GIC Portfolio · Total exposure of all investment activity · Within risk limits set by Client Operating within the Client’s Risk Tolerance

3.2

Building the Portfolio

The Client owns the funds that GIC manages, and decides on the overall risk that the GIC Portfolio can take in pursuit of good long-term returns.

GIC’s investment process begins with the Policy Portfolio, which defines the key asset classes that drive the GIC Portfolio’s long-term returns. The Active Portfolio aims to add value to the Policy Portfolio through skill-based, active strategies, while preserving the exposure to systematic market risks. Together, the Policy Portfolio and Active Portfolio form the GIC Portfolio.

Policy Portfolio: Key Investment Driver

The Policy Portfolio represents GIC’s asset allocation strategy over the long term. It accounts for the bulk of the risk and return potential of the GIC Portfolio, and seeks to balance the way different asset classes respond to different economic environments.

The Policy Portfolio comprises six asset classes: Developed Market Equities, Emerging Market Equities, Nominal Bonds and Cash, Inflation-linked Bonds, Private Equity, and Real Estate. Diversification enables the Policy Portfolio to generate good risk-adjusted returns over a 20-year period.

The Policy Portfolio has a long investment horizon, and is generally maintained through market cycles. GIC’s approach to rebalancing ensures we keep to the allocated ranges of asset classes in the Policy Portfolio. Rebalancing involves systematically buying assets that have decreased in price and selling assets that have increased in price, to keep the asset composition in our portfolio steady over time. When an asset class such as equities does particularly well, the rebalancing rule compels us to sell. Conversely, when equities do poorly, such as after the bursting of an economic bubble, rebalancing calls for us to buy. There will be rare occasions when GIC adjusts our Policy Portfolio’s asset allocation temporarily, in response to medium-term dislocations in the global investment environment or particular assets or countries.

Policy Portfolio

6 4-6% 2 20-30% 1 25-30% 5 9-13% 4 11-15% 3 15-20%

1

Nominal Bonds and Cash

2

Developed Market Equities

3

Emerging Market Equities

4

Private Equity

5

Real Estate

6

Inflation-linked Bonds

Active Portfolio: Skill-based Strategies

The Active Portfolio comprises a group of investment strategies that adds value to the Policy Portfolio while broadly maintaining the same level of systematic risk.

‘Alpha’ is the additional return achieved by active strategies over and above passive buy-and-hold market returns (or ‘Beta’). At GIC, active alpha activities are separated from beta activities to manage different return and risk drivers clearly. GIC’s alpha activities aim to earn returns from our teams’ skills and competitive advantages.

Each active strategy is funded by the sale of a Policy Portfolio asset class or combination of asset classes with a similar overall risk profile. This funding is the cost of capital for the active strategy, over which the strategy is required to generate additional returns. For example, active strategies designed to outperform public equities are funded from passive public equity holdings in the Policy Portfolio. This way, passive investments in the Policy Portfolio are replaced by an active strategy with the potential for greater returns without additional systematic risk to the portfolio.

Construction of an Active Strategy from the Policy Portfolio

The illustrative active strategy ‘A’ has a similar overall risk profile as the weighted combination of three asset classes – Developed Market Equities, Nominal Bonds and Cash, and Real Estate. Strategy ‘A’ is therefore expected to generate a return above that of the combination.

Policy Portfolio 1 6 5 4 3 2 1 5 2 Active Strategy 'A' Each active strategy must generate a return above its cost of capital and is funded through the sale of an asset class or combination of asset classes in the Policy Portfolio with a similar overall risk profile.

1

Nominal Bonds and Cash

2

Developed Market Equities

3

Emerging Market Equities

4

Private Equity

5

Real Estate

6

Inflation-linked Bonds

The GIC Board sets an active risk budget that the GIC Management can use for its alpha strategies. These strategies are stress-tested so we can understand and quantify their performance under various extreme but plausible market conditions, including macroeconomic and geopolitical events. The active risk budget establishes the total level of risk for the Active Portfolio. For example, marketable alternatives or hedge funds typically invest in liquid markets and vary their market exposures via a combination of long and short positions, depending on market conditions. The risk and return profile of this strategy is similar to a combination of Developed Market Equities as well as Nominal Bonds and Cash, and will be funded by these asset classes.

GIC Portfolio

Through the Policy Portfolio and Active Portfolio, the GIC Portfolio is diversified across asset classes, with each carrying a different risk and return profile. Growth assets such as equities generate higher returns, but are riskier. Defensive assets such as sovereign bonds offer lower returns for lower risk, and protect the portfolio in market downturns.

The GIC Portfolio is constructed to be resilient across a broad range of possible market and economic conditions, while generating good returns above global inflation in the long term.

Principles of Portfolio Construction

In GIC, portfolios are constructed to give them the best chances of achieving their intended purposes over appropriate horizons and within appropriate risk limits. For the GIC portfolio as a whole, this means achieving good long-term returns over 20 years while limiting potential downside over the shorter term.

In GIC, portfolio construction is founded on the following principles that define the fundamental basis upon which we allocate capital:

Playing to one’s strengths
We pick and size asset classes and active strategies within the GIC portfolio according to our investment capabilities. This means putting more capital in areas where we think GIC has better access to market opportunities, better understanding and ability to structure and manage the investments, and greater confidence that our investment theses will play out.


Portfolio diversification
This starts with a clear understanding of the real underlying risks of each investment in various scenarios. Then we put together different combinations of investments in various amounts, and stress-test their overall risk. Finally, we choose the portfolio combination that abides by our risk limits even in bad scenarios, and that also gives us the best prospective return. Such a portfolio will invariably be diversified to a large extent, taking advantage of the fact that risks are not perfectly correlated and therefore they work best in combination rather in concentration.


Disciplined and judicious portfolio management
It is important to ensure that ongoing management of investment portfolios is disciplined and based on good analysis and judgment. The GIC portfolio is rebalanced regularly to preserve the intended asset class mix. Actively managed portfolios are reviewed regularly in light of changing market conditions and developments in our active management capabilities.


Distribution of asset classes in the Reference Portfolio which characterises the Client’s risk preference

65% 35%

Equities

Fixed Income

Operating within the Client’s Risk Tolerance

GIC’s Client is the Government, who owns the funds that GIC manages, and has characterized its risk preference using a portfolio of 65% global equities and 35% global bonds (“65-35”). We refer to this as the Reference Portfolio. The Reference Portfolio is not a benchmark, but an expression of the overall risk that the Client is prepared for the GIC Portfolio to take.”

GIC’s investment strategy is to build a portfolio comprising asset classes that can generate good long-term returns above global inflation while adhering to our Client’s risk parameters. There will be differences in exposures and level of risk between the GIC Portfolio and the Reference Portfolio. GIC allocates to a better diversified range of assets beyond just equities and bonds. We may also adjust our level of risk in times of market exuberance or when significant opportunities arise. This is all part of a disciplined, professional approach to long-term investing.

Governance of the Investment Framework

The investment framework encapsulates the various long-term risk and return drivers for GIC. It also reflects the responsibilities of the GIC Board and Management. The Reference Portfolio characterises the Client’s risk appetite, while the GIC Board approves the Policy Portfolio that is designed to deliver good, long-term returns. GIC Management is empowered to add value within the risk limits stipulated by the GIC Board through the Active Portfolio which comprises active, skill-based strategies.

The Investment Board provides an independent layer of oversight on GIC’s active investment management and process. Investment Board members come from the private sector and may not necessarily be GIC Board Directors. Together, they offer extensive experience in various types of investments across geographies. The Investment Board ensures that GIC invests in a sound and disciplined manner. Additionally, the Investment Board ensures that GIC takes into account potential reputational risks arising from investment activities.

The table below summarises the governance of the investment framework.

Governance of the investment framework

GIC Board

  • Approves Policy Portfolio and active risk budget


Investment Strategies Committee

  • Reviews GIC Management’s recommendations on the Policy Portfolio and active risk budget


Investment Board

  • Oversees GIC’s active strategies and large investments

  • Ensures GIC does not incur undue reputational risk in pursuit of returns


Risk Committee

  • Advises the GIC Board on risk matters

  • Sets the overall direction of risk management policies and practices in GIC

  • Reviews significant risk issues arising from GIC’s operations and investments


GIC Management

  • Designs and recommends the Policy Portfolio

  • Adds value by constructing and managing the Active Portfolio within the risk tolerance in GIC’s mandate set by the Client


Investment Teams

  • Implement the Policy Portfolio and active strategies


3.3

Investment Process

As a disciplined, long-term value investor, we take a systematic, patient, and diversified approach in seeking investment opportunities, differentiating between an asset’s current price and its intrinsic value.

GIC’s investing approach is underpinned by our discipline to distinguish price from value. An asset’s price is driven largely by market sentiment, while its value lies in its fundamental worth. Anchored by this perspective, we appraise value thoroughly and adhere to price discipline, even when it sometimes means going against prevailing market sentiment.

To determine where true fundamental value lies, we use both top-down and bottom-up analyses. We identify and assess drivers of long-term value as a core part of our investment process. In the top-down analysis, we review a country’s macroeconomics, politics, currency, and corporate governance culture, as well as sector fundamentals such as industry structure, drivers, and trends. This top-down approach is similar for both public and private markets. Our bottom-up analysis is more varied and depends on the assets we invest in. For example, in public equities, we focus on the stock’s fundamentals, such as the company’s business model and its competitive strengths, balance sheet, profitability, and management. In real estate, our teams conduct bottom-up analyses based on property-specific factors such as location, building quality, tenant mix, lease expiry profiles, and income stream outlook. Our value investing mindset is the common underlying principle.

In all our analyses, looking for long-term value is key. To deliver good long-term returns, we consider all opportunities and risks that could drive investment value in the long run. These considerations, which include track record, ability, and integrity of management teams and business practices, are integral to our investment process. We expect our investee companies to comply with applicable laws and regulations and apply appropriate corporate governance and stakeholder engagement practices.

We also actively advocate long-term thinking in the wider community. We participate in initiatives such as Focusing Capital on the Long Term Global (FCLTGlobal), the International Forum of Sovereign Wealth Funds (IFSWF), and the Task Force on Climate-related Financial Disclosures (TCFD).

3.4

Navigating Thematic
Changes

GIC’s “O-D-E” approach

New forces, from climate change to geopolitical tensions to technological advances, play an increasingly important role in global economies and markets.

To ensure our continued performance over the long term, GIC identifies and organizes major thematic changes using a framework called O-D-E. It is a holistic approach we adopt for our investments and operations. O refers to going on the Offensive when it comes to investment opportunities, D indicates Defensive risk management, and E is the manner in which we constantly improve our operations and processes to achieve Enterprise Excellence.

GIC’s O-D-E framework

O-D-E FRAMEWORK

In the section below, we explain how sustainability is a key focus area for GIC given its long-term impact on consumer and business behaviour, which in turn affects company valuations as well as the communities our investee companies serve. Technology, a second major theme, has also been increasingly important in shaping GIC’s strategies. (For more information, you can refer to our feature article in our FY2018 Report.) In the table that follows this section, we illustrate how we have applied our O-D-E framework to two major disruptive forces in recent years, sustainability and technology.

GIC’s Approach to Sustainability

Sustainability is core to GIC’s mandate as a long-term investor managing the reserves for Singapore. It is an important investment issue and a key management priority. By sustainability, we mean Environmental, Social, and Governance (ESG) issues that could affect companies’ performance and operations.

GIC was founded in 1981 to secure Singapore’s long-term financial future, and tasked with preserving and enhancing the international purchasing power of the reserves under our management. Ensuring long-term sustainability is therefore an important way for us to fulfil our responsibility.

We believe that companies with stronger sustainability practices will generate better risk-adjusted investment returns over the long term, and this relationship will strengthen over time.

Sustainability trends and ESG risks have a profound and growing impact on both the physical as well as the financial world. These factors shape the long-term prospects of companies, and hence their long-term value. Negative externalities, such as climate change, are also increasingly being incorporated into the decisions of regulators, businesses and consumers. As a long-term investor, we position our portfolio to weather a range of market and economic conditions by taking ESG risks into account at every stage of the investment process, and by supporting our investee companies in their transition towards more sustainable business practices and a low-carbon economy.

GIC’s management views sustainability as a key priority. Our Sustainability Committee, which was formalised in 2016, is tasked to implement our sustainability framework, support and promote sound stewardship, and monitor and respond to emerging ESG issues. The committee engages our Investment Board on broad sustainability trends, emerging risks in our portfolio, as well as potential investment opportunities. These top-down insights are shared and empower our bottom-up teams across all asset classes to make informed decisions when assessing investments.

Our investment teams, through their engagement with the companies’ management and industry experts, are able to gain better insights on a company’s sustainability strategy and long-term positioning. This enables us to make better value comparisons. As a responsible investor, GIC takes a holistic and progressive approach to drive long-term positive outcomes for society. We believe it is more constructive to actively engage companies to support them in their transition towards long-term sustainability, rather than to adopt a blunt divestment approach.

By integrating an ESG lens into our management and investment process, we build resilience and diversification in our portfolio to achieve better long-term returns. Diversification is also essential to GIC’s strategy to secure good long-term returns, and our investments span many sectors and impact many stakeholders. As a responsible steward, we strive to create better outcomes for our portfolio and the communities our investments touch.

Applying O-D-E Framework to Sustainability & Technology

Overview


Sustainability

As a long-term investor, we believe that companies with good sustainability practices are likely to generate stronger investment returns over the long term. Our belief in responsible investing and good stewardship drives us to seek better outcomes for our portfolio and the communities our investments touch.


Technology

Technology is a force that continues to reshape entire industries. As technology has disrupted traditional industries and spawned new businesses, our investing and organizational efforts in this area have also expanded.

Offence


Sustainability

As regulators, consumers, and businesses increasingly act on sustainability considerations, new investment opportunities will open up. We aim to capture these opportunities by:

  • Integrating sustainability, including climate-related factors, into our investment processes, for example, taking into account ESG factors in due diligence, risk assessment, and post-investment monitoring.

  • Investing in thematic opportunities arising from climate change, for example, renewable energy assets, “green” buildings, and technologies that support the low-carbon transition.

  • Incorporating sustainability signals into quantitative strategies, for example, by using proprietary data and analyses.


Technology

We gain from technological disruptions by investing in the winners of this shift. This includes:

  • Investing in rising stars with long-term potential: New technological trends will bring about many promising entrants. As a long-term investor, we want to identify the long-term winners.

  • Looking out for the large incumbents: While the spotlight is on new companies, we keep a keen eye on incumbent companies who, with their vast resources, are evolving and influencing industry shifts.

  • Staying agile and adaptable: We keep up with evolving business models by maintaining a flexible mindset towards changing assumptions such as industry classification, pace of change, brand value and the like.

Defence


Sustainability

Sustainability trends, including issues around supply chains, resource scarcity, and climate change, pose certain investment risks, such as the risks of physical assets being damaged by extreme weather events, or the financial risks of assets being “stranded” as economies transition to a low-carbon economy. We protect our investments by:

  • Regularly screening our existing portfolio for a variety of ESG issues.

  • Conducting additional due diligence for companies exposed to greater sustainability risks, and adjusting our long-term valuation and risk models accordingly. On many occasions, we have chosen not to invest in companies or structures when such risks could not be mitigated.

  • Actively engaging our portfolio companies to improve corporate governance, ensure resilience against climate risks, and advocate for other positive environment and social outcomes. We maintain regular dialogues with the senior management and boards of directors on these issues. We also vote responsibly across all active and significant holdings.

  • Supporting the Task Force on Climate-related Financial Disclosures (TCFD): We integrate the assessment of climate change-related risks and opportunities into each step of our investment process. We have developed a set of climate scenarios, which we use to stress-test our portfolio.


Technology

As our diversified portfolio holds many established companies, instituting a defensive stance is very important. This requires having a good understanding and assessment of the threats and opportunities faced by the incumbent companies in our existing holdings. We protect our portfolio value by:

  • Understanding the threats and opportunities driven by the technology shift: One significant benefit from investing in new businesses is a better appreciation of the threats and opportunities faced by incumbent companies. This enables us to more accurately assess the long-term intrinsic value of our portfolio holdings.

  • Working with investee companies to adjust to technology advances: We share our connections and insights, and work with our existing investee companies to evolve with and adapt to new realities. This is aligned with our long-term partnership approach, and contributes to the continued growth of these businesses in the communities that they operate in.

  • Sharing our public market insights with new investee companies: GIC has deep expertise in public market investing, and insights on how to operate a public company and manage the street effectively. Our investee companies who are looking to go public find this sharing useful.

Enterprise Excellence


Sustainability

The manner in which we operate sustainably as an organization is as important as the way we invest. We do this by:

  • Procuring sustainably: We communicate clear expectations for sustainable behaviour by our business partners, and do not enter into contracts with those who do not meet our standards.

  • Encouraging responsible consumption: We do this by cutting down on the use of non-recyclable materials, reducing energy consumption through technology and staff behaviours, and improving the environmental footprint of our office spaces.

  • Fostering collaboration and inclusion: We believe that an inclusive culture, where our people share a common purpose and sense of belonging, brings about exceptional contribution. Our culture embraces diversity of skills and views, and promotes respect and active contribution, for greater collective impact. You can read more in our “People” chapter.

  • Aiming to become carbon-neutral in our operations by FY2020/2021, across our 10 global offices.


Technology

The investment business is not immune from the same offence and defence considerations. As technology continues to progress, we also need to continue evolving our practices and developing our people by:

  • Investing in new technologies: We invest significantly in new systems, software and infrastructure to improve decision making and efficiencies across the entire asset management process. For example, our early investment into cloud computing ultimately enabled GIC to adapt quickly to large-scale telecommuting.

  • Adjusting our processes and structure: We need to ensure digital solutions are relevant and effective. GIC Labs, our in-house technology development centre, creates customised solutions to boost the efficiency of our workforce and the organization. We also embed technology specialists in the investment departments to complement and improve data analytics and insights for deal underwriting and investment decisions.

  • Adopting a tech-driven and innovative culture: We recognize the need for culture change, including the use of agile methods in our processes, greater experimentation and openness to learn and use new technology.

3.5

Investment
Implementation

At GIC, our investment teams work to find attractive bottom-up investment opportunities. Our core investment groups are Public Equities, Fixed Income, Private Equity, Real Estate, and Infrastructure. In addition, our Integrated Strategies Group evaluates and invests in cross-asset investment opportunities. Our External Fund Managers supplement the expertise of our core investment groups, while the Portfolio Execution Group and Investment Services further support the implementation of the investment decisions made.

We are open to investing in all countries outside of Singapore, but do not invest in countries that are subject to United Nations Security Council sanctions. We monitor our investee companies and exercise ownership rights, with the intent of preserving and enhancing long-term investment value and protecting the financial interests of our Client.

Teams involved in GIC’s investment implementation process


Asset Allocation

Economics & Investment Strategy


Constructs long-term portfolio policy, undertakes medium-term asset allocation, as well as innovates alternative investment models


Public Markets


  • Public Equities

  • Fixed Income

  • Portfolio Execution Group

  • External Managers


We invest across developed and emerging markets in equities and fixed income, constructing a diversified portfolio to produce sustainable, risk-adjusted performance

Private Markets


  • Private Equity

  • Infrastructure

  • Real Estate

  • External Fund Managers


In the private markets, we invest in opportunities that have the potential to generate high long-term real returns and the ability to diversify our portfolio


Cross Asset

Integrated Strategies Group


Focuses on cross-asset (public and private), and less conventional investment opportunities, develops thematic investment strategies, and actively expands our network of relationships beyond traditional domains


Investment Services


Supports the public and private market investment activities

Investment Groups in Public and Private Markets

GIC invests in both the public and private markets. In public markets, we invest in public equities in both developed and emerging markets, absolute return strategies (hedge funds), fixed income, and cash. We manage a diversified portfolio to produce good risk-adjusted performance. In private markets, we invest in opportunities that have the potential to generate high long-term real returns and the ability to diversify the portfolio. Real estate assets, in particular, also serve as a hedge against inflation.

List of investment groups

3.6

Managing Risks

Investing involves prudent risk-taking. Identifying and managing risk is therefore a core responsibility of every GIC staff. Each employee has individual accountability and clearly defined responsibilities within our risk management framework. This ensures risks taken are in line with the risk tolerance set by the Client.

Risk Management Objectives

GIC’s risk management objectives are to ensure that:

  1. The investment strategies pursued are consistent with the risk tolerance set by the Client, and within defined bounds authorised by the Client, Board, and Management.

  2. The risks associated with each investment are understood well.

  3. Policies, guidelines, and control processes are in place to reduce the likelihood of significant losses.

  4. Any reputational impact due to our actions is carefully managed.

GIC’s risk management objectives

GIC’s Risk Management Objectives Protect Our Client’s Interests · Ensure that risk-taking activities are in line with GIC’s client mandate, return objective, and risk tolerance · Establish the appropriate policies, guidelines, and control processes to reduce the likelihood of significant losses to Assets under Management · Be mindful of potential reputational impacts on our Client arising from GIC’s investment activities Avoid Permanent Impairment · As a long-term investor, we are willing and able to ride out short-term volatility and go against the crowd. · This means that we might have to stomach potential marked-to-market losses in the interim.

Risk Governance

The GIC Board provides ultimate risk oversight. The Board approves the Policy Portfolio, which is constructed with our Client’s long-term real return objective and risk tolerance in mind. Deviation of asset allocation exposure from policy benchmarks is constrained by a set of operating bands around the Policy Portfolio’s target weights. In addition, the GIC Board sets an active risk budget to limit the risk arising from the deviation of the Active Portfolio from the Policy Portfolio. The GIC Board is supported by the Board Risk Committee, which advises the Board on risk matters. The Board Risk Committee sets the overall direction of risk management policies and practices in GIC. In addition, it reviews significant risk issues arising from GIC’s operations and investments.

The Group Executive Committee is the highest management body in GIC. It deliberates on investment and risk issues before they are submitted to relevant board committees. It is also the forum that assesses and makes determinations on fiduciary risk and reputational risk issues.

The Chief Risk Officer (CRO) is a member of the Group Executive Committee and reports to the Chief Executive Officer (CEO) and Chairman of the Board Risk Committee. The CRO is accountable to the Board of Directors, primarily through the Board Risk Committee, on all risk-related matters.

The CRO chairs the Group Risk Committee that is vested with responsibility to oversee implementation of risk policies, review significant risk issues from investments and operations, as well as to ensure the resolution of these issues.

Three Lines of Defence

GIC’s risk management model operates along “three lines of defence”, ensuring there is clarity and transparency in risk ownership and accountability:

Three levels of risk management

Second line of defence Third line of defence First line of defence Risk Management and Control Functions Internal Audit Operating Units Risk management by business operations Independent risk control and compliance Independent assessment and assurance of internal risk management controls Risk

Risk Management Approach

Our approach to risk management is multipronged:

  1. Managing portfolio investment risk to ensure that risk taken is consistent with our mandate and commensurate with expected returns;

  2. Managing legal, regulatory, and compliance risks to safeguard the reputation and interests of GIC and our Client, and to comply with applicable laws and regulations;

  3. Managing tax risk to ensure compliance with the tax laws of applicable jurisdictions;

  4. Managing operational risk through an effective system of internal controls and processes to support GIC operations;

  5. Managing cyber security, technology and information risk to ensure that our technology resources and information are well-protected;

  6. Managing counterparty credit risk to minimise the impact to GIC if any counterparties were to default;

  7. Managing reputational risk; and

  8. Managing people risk

This multipronged approach to risk management, complemented by the three lines of defence, ensures that risks within the portfolio are looked at in a comprehensive manner. While risks remain, they are well-identified and managed within an established risk tolerance.

GIC’s risk management principles


GIC’s mandate is to generate good long-term risk-adjusted returns


GIC’s risk management objectives


1The investment strategies pursued are consistent with the risk tolerance set by the Client, and within defined bounds authorised by the Client, Board, and Management.

2The risks associated with each investment are understood well.

3Policies, guidelines, and control processes are in place to reduce the likelihood of significant losses.

4Any reputational impact due to our actions is carefully managed.


Risk types


Investment Risk

Tax Risk

Cyber Security, Technology and Information Risk

Reputational Risk

Legal, Regulatory and Compliance Risk

Operational Risk

Counterparty Credit Risk

People Risk

Risk Types

Ensuring Business Continuity at All Times

GIC establishes clear guidelines and processes to reduce the likelihood of significant unexpected losses to the portfolio. Similarly on the operations front, we maintain a robust crisis management and business continuity programme to ensure that we are well-equipped to respond to crisis events and manage the return to business as usual. Crisis events can include, but are not limited to, threats to staff safety or the continuity of GIC’s business operations. A recent example is the COVID-19 pandemic. Having learnt from the experience of the 2003 SARS outbreak, our Business Continuity Management (BCM) team had put in place a detailed plan to respond to an infectious disease outbreak. These were stress-tested through regular exercises, and updated to be in line with industry best practice. When it became clear that the spread of COVID-19 was escalating, we were able to respond swiftly by implementing the precautionary measures in our plans, including split operations and large-scale telecommuting, without compromising our operational capabilities significantly.


A Coordinated, Global Response to Disruptions

Given the potentially extensive impacts of any crisis event, ensuring business continuity is a coordinated effort that involves representatives from all of GIC’s offices and departments.

The BCM Steering Committee, chaired by the Chief Operating Officer, oversees the development and review of GIC’s overall BCM framework, and reports to GIC’s Group Executive Committee. The BCM Steering Committee manages crises with the BCM Working Group and local BCM Incident Management Teams who implement response activities on the ground. During a disruption, they collectively ensure consistent communication, coordination and monitoring across GIC, and timely activation of business continuity plans so that critical business operations can proceed. Additionally, the local teams adjust and implement measures based on the latest national standards and developments.

We also leverage technology for the efficient management of our business continuity programme. A standardised tool that adopts the GIC risk posture is used for data collection, analysis and development of strategies. The tool serves as the central repository for all BCM resources, enabling clarity and transparency.


Continuous improvement

GIC’s BCM programme was established in 1999. To meet evolving standards and business needs, our business continuity plans are reviewed regularly, through external certifications and internal exercises. Our global programme holds the ISO 22301 certification, the international standard for business continuity management, and maintains this certification through annual external attestations.

We also apply lessons from past crises to the continuous improvement of our BCM programme. In responding to the COVID-19 pandemic, we started with plans developed from our experience with SARS in 2003 and H1N1 in 2009. After two weeks of split operations and exposure to new practices such as contact tracing and quarantine orders, we recalibrated our internal processes to better suit the changing conditions. Through these experiences, we recognize the importance of agility and flexibility to adapt broad plans to cater to each situation.

Business Continuity Management processes

3 2 BCM Steering Committee 1 1 2 3 Management oversees the BCM programme from from GIC’s headquarters in Singapore Department representatives appointed to ensure smooth execution of any BCM plans Local BCM incident teams ensure consistent and coordinated responses that reflect national standards and latest developments B e i j i n g , L o n d o n , M u m b a i , N e w Y o r k , S a n F r a n c i s c o , S a o P a u l o , S e o u l , S i n g a p o r e , S h a n g h a i , T o k y o R i s k , L e g a l & C o m p l i a n c e , M e d i a & C o m m u n i c a ti o n s , G o v e r n a n c e , P e o p l e , F a c i l it i e s , T e c h n o l o g y , I n v e s t m e n t P r o c e s s & F i n a n c e , P o r tf o l i o E x e c ut i o n

More sections

  1. 1

    The FSB Task Force on Climate-related Financial Disclosures (TCFD) develops voluntary, consistent climate-related financial risk disclosures for use by companies. We find that it provides a practical framework for companies to disclose their climate-related strategies and investors to make investment decisions for the long term.