Editorial Board Spotlight: A behind-the-scenes look at Richard Chan's unique role
Richard Chan’s role with Chow Tai Fook Life Insurance Company (CTF Life) is unique: he heads both the investment and the asset liability management (ALM) functions as the chief investment and ALM officer.
With Hong Kong entering a new risk-based capital regime this year, the collaboration between investment and ALM teams has become more crucial than ever.
But that brings with it its own set of challenges. Yet as Chan noted, “the most crucial factor for achieving success in any role is recognising our inherent limitations”.
“We face constraints such as limited time, attention, knowledge, cognitive biases, and restricted personal and professional networks. While hard work and a commitment to continuous learning can help mitigate these challenges, true success ultimately hinges on our ability to leverage larger pools of resources available to us,” he said.
“For instance, in my current role at Chow Tai Fook Life, this means exploring how we can tap into the expertise (on ESG, for example) and business relationships from the broader group."
It also involves encouraging collaboration across departments such as actuarial, finance, capital, and risk, to ensure optimal financial outcomes in terms of solvency, earnings, liquidity, and policyholder returns.
“Additionally, I strive to build a diverse team within my own department to ensure we harness a wide range of expertise,” he added.
CTF Life is a wholly owned subsidiary of Hong Kong’s Cheng family’s Chow Tai Fook Group. It managed a globally diversified investment portfolio worth HK$74.9 billion ($9.6 billion) as of end-2023.
A REWARDING ROLE
Wearing both the investment and ALM hats, Chan thinks one of the most rewarding aspects of his role is the unique structure of the investment and ALM team in Hong Kong.
“This centralised setup fosters collaboration and synergy among team members… granting us comprehensive oversight of a sophisticated investment process,” he said.
It benefits the insurer from an open operating model that includes an extensive range of internally managed assets, strategic partnerships with asset management firms, and external managers and funds tailored for specific asset classes.
“This framework empowers us with complete discretion over manager and fund selection, ensuring that our investment strategies are not only robust but also agile,” he said.
It enables Chan and his team to collaborate with many of the industry's business partners.
He gets to talk to asset managers specialising in different asset classes and markets; to banks to discuss advanced hedging and liquidity solutions; and to brokers to understand what is available in the market and fund flows.
The CIO also works closely with risk system providers and data vendors and of course, management and investor relations teams of CTF Life’s portfolio companies to gain first-hand insights into their fundamentals.
BOOK PICKS
As an investment professional with 20 years of industry experience in Hong Kong, Chan recommends three books for anyone interested in finance, history and simply understanding the world around them.
The first book is The Age of Turbulence written by Alan Greenspan, who is considered one of the most important figures in contemporary finance and economics.
The book discusses challenges faced by the US Federal Reserve in balancing its dual mandate of controlling inflation and promoting employment during a tumultuous economic period.
“This book serves as essential reading for younger financial professionals who may not have personally experienced the persistent high inflation regime in their careers,” Chan noted.
The second recommendation is a Chinese history book series called A Different Chinese History authored by Yang Zhao, which examines how China’s political system has evolved over time across various dynasties amid unique socioeconomic challenges.
“This approach offers a more comprehensive perspective than typical Chinese history books, which often focus primarily on wars, and the merits or failings of rulers,” Chan said.
The last pick is Elsa Panciroli’s The Story of Life on Our Planet through 47 Incredible Organisms.
Beyond its leisure reading appeal, Chan said the book offers important lessons about how slight changes in atmospheric composition and global temperatures can lead to massive extinction events, which, in return, drives home the real impact of climate change.