Managing Risk

We adopt a long term view of our investments, with the flexibility to take concentrated positions. We invest across all stages of the business life cycle, from early stage and/or unlisted, to large or listed assets. We do not have targets for investing by asset class, country, sector, or single name.

Our long investment horizon means we have a portfolio of predominantly equities which deliver higher risk-adjusted returns over the long term. Our stable funding base allows us to invest and benefit from companies with high growth potential through listed and unlisted assets (including private equity funds).

Consequently, given the high equity component, our portfolio is expected to have higher year-to-year volatility of annual returns, with a greater risk of negative returns in any one year.

Our investment posture is to ride out short term market volatility and focus on generating sustainable returns over the long term.

Given the expected volatility, we manage our leverage and liquidity prudently for resilience and investment flexibility, even in times of extreme stress.

Our investment posture is coupled with a culture of risk ownership throughout the organisation. This applies to both our investment activities and institutional capabilities. Our risk-sharing compensation philosophy puts the institution above the individual, emphasises long term over short term, and aligns the interests of our staff with those of our shareholder.

We have no tolerance for risks that could damage the reputation and credibility of Temasek.

Our Organisational Risk Management Framework includes Risk Return Appetite Statements which set out various levels of risks tolerance, from reputational risk to liquidity risk, and risk of sustained loss of overall portfolio value over prolonged periods.

For more information, please see How We Manage Risks in the Temasek Review.