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How Chow Tai Fook family office manages risk with tech

Hong Kong-based Chow Tai Fook Enterprises values its employees above work processes and invests in information technology to manage risk and stay ahead of the competition.
How Chow Tai Fook family office manages risk with tech

A people-centred management and the investment in information technology are among the key factors behind a major Hong Kong family office's ability to grow its assets at a time of unprecedented risk, according to a senior executive at the firm.          

Chow Tai Fook Enterprises (CTFE) - the private investment arm of the Cheng Family - carefully selects the right people to create efficient work processes with the help of information technology. With this system in place, the company is able to spot megatrends, strategise for growth, and manage risks, said Alison Chan, its chief operating officer at the AsianInvestor’s COO Investment Virtual Forum on April 13.    

PUTTING PEOPLE AT THE CENTRE

Alison Chan
CTFE

CTFE defines corporate growth not just in financial terms but also includes the personal development and enhanced well-being of its employees, she said.

“Everything we do must be to facilitate growth. And by that, we don't just mean capital growth or financial return. We also mean personal growth, for example, of our colleagues,” she said, adding this had become even more important when there was increased competition for talent in a tight labour market.

One of her main functions as COO is to select good leaders to support the company’s strategic growth at a time of rapid changes and unparalleled risk in the investment climate.

Challenges, she said, include rising inflation, geopolitical tensions, and tighter regulations. 

“You've got to constantly evaluate whether you've got the right organisational structure, the right people in the right job, and is there a need to upskill or create a new department that takes care of certain things,” she said.

This might sound simple, but the execution is far from easy. She recounted how she had to interview more than 20 candidates before finding a suitable person to head the firm’s IT department.

Putting employees ahead of work processes is an important part of the corporate culture at CTFE, she said. For example, the company actively sought the views of its employees for its digital transformation process which led to improved data management.

“You can have the best system but if people don't think in a certain way, you don't get the right data into the system or your processes, it will not be efficient,” she said.

Another objective of digital transformation is to raise productivity by relieving the employees from tasks that can be automated to allow them to focus on the most important issues.

“Because we believe that if we adopt the new practices, everybody will be making only the most important decisions. A lot of the things that I would call BAU (business as usual) distractions would be taken care of by automation and processes,” she said. 

The time saved from the tedium of that kind of work is then given back to employees in terms of opportunities for self-growth, work-life balance, and upskilling themselves, she said, adding this could only be achieved if the employees understand the objective.

TECHNOLOGY – THE SECRET SAUCE 

She said that CTFE has invested in robust IT security measures to manage risks such as cyberattacks and ransomware. It has an operating centre that provides round-the-clock security for its infrastructure.

In addition, she said the company is the first family office in Asia to attain data privacy and security standards equivalent to that of banks. “So, we're already at bank-level security.” 
 
CTFE has also invested in a portfolio management system that is linked to all private banks compared with many other systems that are linked only to the prime brokers, she said, adding that the company had taken steps to stay ahead of the competition.

In times of market volatility such as the recent Ukraine crisis, the investment in data technology – which she coined the “secret sauce” or the competitive edge – has helped the firm determine its exposure quickly and make informed decisions with the data.

It helps that CTFE has a slim, nimble organisation structure that allows its senior management to respond swiftly to sudden market developments, she said.

The focus on information technology has also enhanced the firm’s ability to conduct data-driven scenario planning, based on real macroeconomic and geopolitical developments.

Instead of assessing only the short-term impact, it can now carry out a longer-term risk analysis of the underlying development, be it the Ukraine crisis or inflation, if it is prolonged, she said.

Chan likens her role as a partner and facilitator for the leadership team where she may have to break down silos, if necessary, to support the chief executive and senior management in coming up with the right strategies.  

“So, I think as the COO, I can step in and harness all the different perspectives when we do the scenario planning,” she said.

 

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