Business Risk Model
| Business Risk Model | Description | Management and Mitigation | Information and Data Security Risk | refers to the potential threats and vulnerabilities that may compromise the confidentiality, integrity, and availability of an organization's information and data. This risk encompasses the possibility of unauthorized access, disclosure, alteration, or destruction of sensitive information, leading to financial, operational, and reputational consequences | Inclusion of dedicated information security and data protection expertise within the Group. Implementation of technical and procedural controls to minimize the occurrence or impact of information security and data protection breaches. Regular implementation of system access reviews across the business |
| Business and strategic business model risks | The risk arises from potential negative consequences stemming from the Group's strategic decision making and the inability to capitalize on strengths or seize opportunities. This risk has the potential to lead to damages or losses, whether financial or otherwise, impacting the entire Group | Implementation of a robust governance framework, featuring three independent Non Executive Directors along with the Chairman serving on the Board. Ensuring robust governance, involving rigorous challenge and oversight from independent Non Executive Directors. Guiding the Group in alignment with the agreed upon strategy, policies, and risk appetite |
| Preparedness for the risk associated with regulatory changes | The risk entails the possibility that alterations to the regulatory framework within which the Group operates may affect its performance. These changes could lead to decreased profitability, increased operational challenges in offering products to clients, or a complete prohibition of the product offering in one or more countries where the Group operates | regulators and industry bodies. Regular monitoring of market and regulator sentiment regarding the product offering. Consistent monitoring and advice from the compliance department regarding the impact of actual and potential regulatory changes. Maintaining a business model and proprietary technology that are adaptable to changes in regulatory requirements |
| Reputational Risk | This risk encompasses the potential for adverse impact on the Group's brand or standing with shareholders, regulators, existing and potential clients, the industry, and the public at large. | The Group adopts a conservative approach to reputational risk and implements robust controls to effectively mitigate significant risks to its brand and standing. Proactive engagement with regulators, active participation in trade and industry bodies, and the positive development of media relations with strictly controlled media contact are some examples. Implementation of systems and controls to maintain the delivery of quality service to clients and enable a prompt and effective response to address any potential issues |
| Financial Risks/ Credit and counterparty risks | The risk pertains to potential losses incurred due to a counterparty failing to fulfill its obligations in a timely manner | Client Counterparty Risk: The Group manages client counterparty risk effectively through the utilization of automated liquidation functionality. This feature facilitates the reduction of client positions if the total equity of the account drops below a pre defined percentage of the required margin for the held portfolio. JMI Brokers provides negative balance protection to retail clients, capping the liability of a retail investor to the funds held in their trading account. Despite these mitigations, there remains a residual risk wherein the Group could face losses associated with clients (excluding those under negative balance protection) entering into debit balances due to market gaps |
| Liquidity risk | The risk involves the possibility of inadequate available liquidity to fulfill the Group's liabilities as they become due | The Group employs a mix of liquidity forecasting and stress testing to detect potential liquidity risks in both normal and stressed scenarios. This comprehensive analysis includes considering the influence of all relevant liquidity regulations across jurisdictions where the Group operates, as well as any other factors that may hinder the unrestricted movement of liquidity within the Group |
| Market Risk | This risk pertains to the potential decline in the value of our remaining portfolio due to changes in market risk factors. The three primary market risk factors include price movements, interest rates, and foreign exchange rates | Trading risk management diligently oversees and manages exposures inherited from clients in real time, in accordance with the risk appetite approved by the Board. Financial risk management systematically performs stress scenarios on the residual portfolio, considering a range of single and combined Company specific and market-wide events. The purpose of this assessment is to gauge potential impacts on financial and capital adequacy, ensuring the Group's robustness against significant movements in the risk drivers to which it is exposed |
| Operational risks | The risk involves the possibility that business change projects may be ineffective, fail to achieve stated objectives, or lead to resource strain to the detriment of regular business activities | Implementation of a governance process for all business change programs, with oversight and scrutiny from the Executive and Board. Active engagement of key users in the development and testing phases of all critical change programs. Establishment of robust post implementation support, monitoring, and review procedures for all change initiatives. Communication of strategic benefits and the delivery of the change agenda to employees |
| Business Continuity and Disaster Recovery Risk | refers to the potential challenges and disruptions a business may encounter in maintaining essential operations and swiftly recovering from unforeseen disasters or significant disruptions. This risk encompasses the threat of financial loss, operational setbacks, and damage to reputation due to the inability to sustain critical functions during and after a crisis | Utilization of multiple data centers and systems to enhance the resilience of core business activities, making them resistant to individual failures. Implementation of remote access systems, enabling staff to work from home or other locations in the event of a disaster recovery or business continuity requirement. Regular testing of business continuity processes and disaster recovery procedures. Establishment of robust incident management processes and policies to ensure a prompt response to significant systems failures or interruptions |
| People risk | The risk of losing critical personnel, facing a shortage of skilled and motivated resources, or failing to execute people related processes to a satisfactory standard | Inclusion of dedicated information security The Board has mandated the continuous development and implementation of People, Succession, and Resource Plans for both the Group and key individuals and teams. This proactive approach is designed to mitigate the risk of losing key personnel. The adopted policies and strategies align with the Group's objectives, including: Attracting and nurturing top tier talent. Retaining and motivating key individuals. Effectively managing employee related risks. Achieving a high level of employee engagement. Developing personnel capabilities. Optimizing continuous professional development. Establishing a reputation as a commendable These measures reflect the commitment to creating a resilient and motivated workforce, ensuring the Group's sustained success and competitiveness in the market |
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