Risk Analysis Report: AMP Limited's Business Operations and Financials

This report presents a comprehensive risk analysis of AMP Limited, a well-established financial institution operating in Australia and New Zealand, with increasing international investments. The analysis encompasses various aspects, including understanding the nature of the entity, its business operations, investment activities, and financial reporting practices. The report further delves into the industry context, examining industry size, growth, supply chain, major players, market shares, critical success factors, and potential threats. It also explores AMP Limited's financial performance, management, and governance. The report utilizes a step-by-step approach to risk analysis, incorporating insights from financial reports and industry data to provide a holistic view of AMP Limited's risk profile and its position within the financial services sector.

Auditing and Assurance

Contents
Part 1 – Understanding Nature of the entity...............................................................................2
Business operations................................................................................................................2
Investment and Investment Activities....................................................................................2
Finance and Financial Activities............................................................................................2
Financial Reporting Practices.................................................................................................3
Part – 2 Understanding the Industry...........................................................................................3
Industry size............................................................................................................................3
Industry Growth......................................................................................................................3
Industry supply chain.............................................................................................................3
Major players..........................................................................................................................4
Market shares of industry players...........................................................................................4
Critical success factors...........................................................................................................4
Major Threats.........................................................................................................................4
References..................................................................................................................................5
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Introduction
AMP Limited is one of the Australia and New Zealand's well established and independent
wealth management financial institution. The firm is increasing its international investment
and is also strategically growing its retail banking activities in Australia. The main aim of this
firm is to provide financial as well as other products and services related advice to people as
well as other organizations in order to build their financial security. Other than Australia and
New Zealand the company is serving in different continents like Asia, North America, and
Europe and also in the Middle Eastern Countries (AMP, 2017). This report presents the risk
analysis of AMP Limited. For doing risk analysis, various steps have been followed. This
includes understanding nature of entity, the Industry in which company operates, the legal
environment, and external environmental factors. In addition, report also discusses about
AMP’s financial performance, management and governance, objectives and strategies.
Part 1 – Understanding Nature of the entity
Business operations
AMP Limited exists in the financial industry from last 160 years. AMP Limited has grown
their business in the last decades and has become one of the leading specialists in wealth
management in countries like Australia and New Zealand. The main business operation that
is carried on by the AMP Limited is providing financial advices to their customers, providing
investment products like retirement income, superannuation etc., to its customers as well as to
its businesses. Its business operation also covers life insurance, and also income protection.
Its operation also undertakes administration activities and also provides banking and
investment services. The company also helps its customers with investing in shares and also
in properties and infrastructure, etc.(AMP, 2017).
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Investment and Investment Activities
AMP Limited undertakes various investment activities for their clients. They undertake
investment activities in the field of real estate, shares and equities, infrastructure and other
various multi-assets portfolios. To undertake these investment activities the company
collaborates with several other international investment partners in order to get access to
various other new investment opportunities that are available in the global market(Mason,
2017).
Finance and Financial Activities
The AMP Limited has more than 5400 employees and more than 8 lakh shareholders attached
to the company and the companymanages over 220 billion dollars’ worth assets. The
company provides financial products and also solutions related to financial matters to their
customers. The company undertakes this activity with the help of a number of financial
advisors who have vast experience and knowledge on financial matters so that the customers
can benefit to the maximum level. AMP is considered to be the market leader when it comes
to financial advices. The AMP Limited’s financial services acquire a leading position in the
market when it comes to wealth protection as well as wealth management(Infopub, 2016).
Financial Reporting Practices
High performing organizations in order to evaluate their annual performance as well as to
comply with the regulations and showcase their achievements to their customers practice the
system of financial reporting. In this financial reporting the AMP Limited has discussed
about its vision, mission and goals; what all are the strengths of the company and in what
field the company is dealing as well as prospering. The profits that the company has earned
and the taxes that the company has paid everything are discussed in this financial report(AMP
Group Finance Services Limited, 2016).
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Part – 2 Understanding the Industry
Industry size
The banking and finance industry forms an important part of the Australian economy. The
financial service sector of Australia is one of the largest contributors of the economy. It
contributes nearly $140 billion to the Australian GDP over the last few years(Fintech, 2017).
Industry Growth
Financial sector plays a major role in reshaping the growth of the country. It increases the
capitalinvestment for the economy as a whole by entering into partnership with the business
and the government. The financial system of Australia has been able to mobilize the savings
of the people and gave them a direction to invest their money in the market to boost capital
formation of the country. So, it can be said that banking and financial sector plays a very
important role to boost the growth of the country as a whole(FSI, 2014).
Industry supply chain
The financial sector has started to adoptthe concept of supply chain management. The supply
chain has come from the well-established concept of supply chain in the trading world. The
banking and financial sector supply chain involves the payments side of the business, which
includes the transactions starting from the purchase order till the final settlement is done. The
main importance of adopting the supply chain management is that know the banking and the
financial institutions will be able to take an informed decision and work accordingly(Britz,
2007).
Major players
The major banking and financial institution players of Australia includes the Bank of
Queensland, one of the oldest in Queensland; Bendigo and Adelaide Bank; Bankwest, is a
full service bank which is based in Perth; Suncorp Group Limited, one of the largest banks of
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Australia; AMP Bank Limited, offers financial services and is opening its subsidiaries
worldwide(Business Review Australia, 2014).
Market shares of industry players
The market share of the major banks in Australia has seen to be increasing the past few years.
Their market share has been increased from 65.4 per cent in 2007 to 78/5 per cent in the year
2014 and since it has shown an upward trend in the market share(FSI, 2017).
Critical success factors
The major critical success factors of banking and financial institutions are tracking the results
that are outcomes of marketing efforts. Communicating the brand in front of the
company’semployees as well as customers. Focusing on the ever-changing needs of the
people and offering them services accordingly. Also make proper utilization of the resources
available and the recent technologies are some of the major critical success factors(Wagner,
2017).
Major Threats
The major threats that comes in front of the banking and the financial institutions is that the
banks are not able to make enough money as they are not getting their return on investment
properly as well as the return on equity. The competition is increasing day by day because of
the opening up of the financial technologies companies in the market. The regulatory
pressures are other threats to the banking industry as they have to spend a large part of their
income to comply with the norms of the government.
References
AMP Group Finance Services Limited, 2016. Directors’ report and Financial report for the
year ended 31 December 2016. [Online] Available at:
http://www.annualreports.com/HostedData/AnnualReports/PDF/OTC_AMLTY_2016.pdf
[Accessed 26 sept 2017].
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AMP, 2017. Anout AMP. [Online] Available at: https://www.amp.com.au/amp/about-amp
[Accessed 26 sept 2017].
Britz, M.B., 2007. Banks Starting to Embrace Concept of Financial Supply Chain
Management. [Online] Available at: http://www.banktech.com/payments/banks-starting-to-
embrace-concept-of-financial-supply-chain-management/d/d-id/1291166? [Accessed 26 sept
2017].
Business Review Australia, 2014. Top 10 Banks In Australia. [Online] Available at:
http://www.businessreviewaustralia.com/leadership/1364/Top-10-Banks-In-Australia
[Accessed 26 sept 2017].
Fintech, 2017. The strength of Australia’s financial sector. [Online] Available at:
https://fintech.treasury.gov.au/the-strength-of-australias-financial-sector/ [Accessed 26 sept
2017].
FSI, 2014. Financing Australia’s Growth. [Online] Available at:
http://fsi.gov.au/files/2014/04/Industry_Super_Australia_2014.pdf [Accessed 26 sept 2017].
FSI, 2017. Banking sector. [Online] Available at: http://fsi.gov.au/publications/interim-
report/02-competition/banking-sector/ [Accessed 26 sept 2017].
Infopub, 2016. AMP Group Finance Services Limited. [Online] Available at:
http://infopub.sgx.com/FileOpen/AMP%20GFS%20FY15%20Directors%20Report%20and
%20Financials.ashx?App=Announcement&FileID=398722 [Accessed 26 sept 2017].
Mason, P., 2017. Directors’ Report and Financial Report for the half year ended 30 June
2009. [Online] Available at: https://www.google.co.in/url?
sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwjD2PXxj8L
WAhXKOI8KHW8fCcAQFggnMAA&url=http%3A%2F%2Fphx.corporate-ir.net
%2FExternal.File%3Fitem
%3DUGFyZW50SUQ9NDc2MzMxfENoaWxkSUQ9NTA4ODMzfFR5cGU9MQ%3D%3D
%26t%3D1&u [Accessed 26 sept 2017].
Wagner, N., 2017. The Key Success Factors in Financial Services. [Online] Available at:
http://smallbusiness.chron.com/key-success-factors-financial-services-63370.html [Accessed
26 sept 2017].
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