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39. RISK MANAGEMENT (continued)
39.5 INSURANCE-RELATED RISK MANAGEMENT (continued)
Market and credit risk (continued)
(I) Sensitivity analysis on financial risks
The sensitivity analysis below shows the impact on GEH Group’s net profit after tax by applying possible shocks to each key variable,
with all other variables constant. While the co-movement of key variable can significantly affect the fair values and/or amortised cost
of financial assets, but to demonstrate the impact due to changes in each key variable, the variables are changed individually.
The impact on profit after tax represents the effect caused by changes in fair value of financial assets whose fair values are recorded in
the income statement, and changes in valuation of insurance contract liabilities. The impact on equity represents the impact on profit
after tax and the effect on changes in fair value of financial assets held in Shareholders’ Funds.
Market risk sensitivity analysis
Impact on profit after tax
$ million
2017
Change in variables:
(a) Interest rate
+100 basis points
–100 basis points
(b) LTRFDR
+10 basis points
–10 basis points
(c) Foreign currency
5% increase in market value of foreign currency denominated assets
5% decrease in market value of foreign currency denominated assets
(d) Equity
20% increase in market indices
STI
KLCI
20% decrease in market indices
STI
KLCI
(e) Credit
Spread +100 basis points
Spread –100 basis points
(f) Alternative investments (1)
10% increase in market value of all alternative investments
10% decrease in market value of all alternative investments
(1)

2016
Impact on equity
2017
2016
(438.9)
419.3 (93.2)
23.1 (522.2)
509.7 (198.2)
139.4
43.9
(46.7) 17.6
(18.9) 43.7
(46.7) 17.6
(18.9)
108.9
(108.9) 24.3
(24.3) 187.0
(187.0) 90.8
(90.8)
218.9
3.2 17.5
0.5 317.7
42.6 99.8
12.3
(218.9)
(3.2) (17.5)
(0.5) (317.7)
(42.6) (99.8)
(12.3)
(569.8)
654.5 (277.6)
328.2 (632.5)
712.5 (341.9)
397.4
52.7
(52.7) 21.4
(21.4) 58.4
(58.4) 43.9
(43.9)
Alternative investments comprise investments in real estate, private equity, infrastructure and hedge funds.
The method for deriving sensitivity information and significant variables did not change from the previous year.
BUILDING ON OUR CORPORATE STRATEGY FOR SUSTAINABLE GROWTH
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