iFAST Corporation Ltd (SGX: AIY) is an Internet-based investment products distribution platform that has a presence in Singapore, Hong Kong, Malaysia, China, and India. It has two main business divisions – one that caters to consumers (B2C) and the other that caters to businesses (B2B).
In this article, we will look at an important aspect of the company – its risks – to help us better understand the business.
Here, we will look at the two main risks outlined by the company and how it plans to manage those risks.
This is the risk arising from non-compliance with relevant regulations. Non-compliance of regulations may lead to penalties, negatively affecting iFast’s reputation, customers’ trust, and even the business continuity of the company.
Moreover, changes in regulations may impact product and service providers, and in turn disrupt the products and services offered by iFast.
So how does iFast plan to deal with these risks? Here’s what the company shared in its annual report:
- Regular compliance checks and audits; proper supervision and stringent approval processes to flag up non-compliance incidents
- Set in place proper work processes and documentation requirements
- Regular and ad-hoc training sessions for work processes
- Provide a high level of disclosure and transparency for aspects such as fee structure, product features, investment advisory, company and financial disclosures etc.
- Ensure timely response to regulatory issues
- Identify possible areas of conflict of interests and subject them to stricter regulatory checks
Technology risk is a result of iFast’s business model that is highly dependent on the latest technology. In particular, breaches in IT systems and cybersecurity, failure to keep up with the latest technological advances, as well as weakness in its operational processes, are some of the key aspects that iFast has to deal with in order to smoothly run its business.
To manage the above risks, iFast is taking the following steps:
- Effective monitoring and assessment processes for cybersecurity and other IT-related work processes
- Effective service recovery and rectification processes
- Regular checks on IT infrastructure
- Regular IT security training for employees
- Cybersecurity and data security measures to protect customers’ accounts and assets
- Keep abreast of the latest IT developments and trends which may disrupt business operations, or those that can be leveraged to improve our platform capabilities
The above are two important risks that the company recognises and aims to effectively manage, as outlined in its 2018 annual report.
Given that risks and risk management are part and parcel of managing a company, it is important that investors understand and are comfortable with them before deciding to invest.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned. Motley Fool has a recommendation for iFAST Corporation Ltd.