Hang Seng is committed to high standards of corporate governance - We follow the corporate governance requirements of various codes and modules issued by regulatory bodies such as the Hong Kong Monetary Authority, The Securities and Futures Commission and The Stock Exchange of Hong Kong Limited. More details can be found in the 'Corporate Governance and Other Information' section of our 2007 Annual Report.

Board of Directors
As at 3 March 2008, our Board consisted of three executive Directors and 13 non-executive Directors. Of the 13 non-executive Directors, nine are independent non-executive Directors. The Board held seven meetings in 2007.

All Directors enjoy full and timely access to all relevant information about our operations. Each Director also has individual access to our senior management. In addition, there are established procedures for Directors to seek independent professional advice on matters relating to Hang Seng, with all costs borne by the Bank.

The role of Chairman of the Board, who is an independent non-executive Director, and Chief Executive of the Bank are segregated with a clear division of responsibilities. While the Board of Directors is led by the Chairman, the Chief Executive exercises all the powers, authorities and discretions of the Executive Committee as may be delegated to him in respect of Hang Seng and its subsidiaries.

The Board has established three committees: the Executive Committee, the Audit Committee and the Remuneration Committee, each of which has specific terms of reference that clearly set out their authority and duties.

Our key business values include a solid commitment to truthful and fair business dealings, to acting with due skill, care and diligence in the conduct of our business, and to ensuring that our staff comply with both the letter and the spirit of all relevant rules, regulations, guidelines and codes of conduct.

Code of Conduct
All staff are required to strictly adhere to the Code of Conduct contained in our Staff Handbook. Following regulatory guidelines and industry best practice, the Code sets out the ethical standards and values that all staff must adopt. Topics include the use of information, insider dealing and personal investment dealing, personal benefits, outside directorship/employment and anti-discrimination policies. All staff are required to sign a declaration on an annual basis to certify their strict compliance with the Code.

Staff Awareness
The most effective way of ensuring legal and regulatory compliance, as well as guarding against illegal activities such as fraud and money laundering, is to maintain a high level of staff awareness through training. To this end, various compliance training programmes are provided to staff, including but not limited to equal opportunities, data privacy, office health and safety, anti-money laundering and code of banking practice.

Insider Information
We have comprehensive systems and procedures in place to keep information confidential and manage potential or actual conflicts of interest. Stringent internal structures operate to prevent the misuse of insider information. Staff working in sensitive or high-risk areas are required to undergo additional job-specific training.

Whistle-blowing
We encourage the reporting of suspected internal business irregularities and provide clear channels specifically for this purpose.

Anti-money Laundering
It is our policy to comply with high standards of anti-money laundering and counter-terrorist financing practices in the jurisdictions in which we operate.
We comply with both the specific provisions and the spirit of all relevant laws and regulations. In any jurisdiction where local requirements are set at a lower standard than those established by our Group, our higher standards will apply where these do not contravene or conflict with local requirements.

The effectiveness of our risk management policies and strategies is a central factor in our success. As part of the financial services industry, we are exposed to several types of risk, the most important of which are credit, liquidity, market, insurance underwriting, operational and reputational risks.

We have established systems to identify and analyse risks and to set appropriate risk limits to control this broad spectrum of risks. Risk management policies and major control limits are approved by the Board of Directors. Business and functional units are responsible for the assessment of individual types of risk arising under their areas of responsibility, the management of these risks in accordance with the relevant procedures and reporting on risk management. The relevant risk management reports are submitted to the Executive Committee, Audit Committee, Asset and Liability Management Committee, and subsequently to the Board for monitoring the respective types of risk. (More details on our management of risk can be found in the 'Corporate Governance and Other Information', 'Financial Review' and 'Financial Statement' sections of our 2007 Annual Report.)

We have an Investment Products Oversight Committee to oversee the sale and distribution of investment products to our retail customers, approve new products and review customer complaints with the aim of mitigating investment-related potential reputational risks.