The investment unit follows the prudent person principle in managing the funds of the institution. The prudent person principle is integral to the fiduciary duties of the board and management in administering and managing the funds of the institution.
Guideline code
GG_08200
Mechanism
Mechanism
- The management should establish standards and benchmarks to evaluate the performance of the investment unit, noting that the performance evaluation period should take into consideration the nature of the assets invested in.
- Manuals of procedures should document how investment policies are to be implemented in accordance with the prudent person principle.
- Compliance with the manuals of procedures must be monitored and reviewed.
- Staff compensation should provide the appropriate incentives to do right and not to do wrong.
- The decision-making process must be clear and transparent.
- The liability of the officers and staff of the investment unit must be clearly established.
Structure
Structure
- There should be minimum suitability standards for all staff in the investment unit.
- All staff should be bound by a code of ethics and conduct.
- There should be an office external to the investment unit, to monitor compliance with the minimum suitability standards and the code of ethics and conduct.
- To establish clear accountability, the organizational structure of the investment unit should reflect the investment decision-making process and should embed a system of checks and balances.
- The internal audit office should dedicate competent staff to the investment unit.
- There should be an office external to the investment unit to evaluate, monitor and review the overall risk of the investment portfolio.
Title HTML
Guideline 62. Prudent person principle
Type
Guideline_1
Weight
86