Ashmore : 2019 Pillar III

Ashmore Group plc

Pillar 3 disclosures as at 30 June 2019

Ashmore Group plc Pillar 3 disclosures

Contents

1.	Overview........................................................................................................................	3
	1.1.	Basis of disclosures ................................................................................................	3
	1.2.	Frequency of disclosures ........................................................................................	3
	1.3. Media and location of disclosures ...........................................................................	3
2. Corporate governance and risk management ................................................................	4
	2.1.	Governance framework...........................................................................................	4
	2.2.	Risk management framework .................................................................................	4
3.	Risk categories ..............................................................................................................	9
	3.1.	Credit / counterparty risk .........................................................................................	9
	3.2.	Market risk ............................................................................................................	10
	3.3.	Liquidity risk ..........................................................................................................	11
	3.4.	Operational risk.....................................................................................................	12
	3.5.	Concentration risk .................................................................................................	13
	3.6.	Residual risk .........................................................................................................	14
	3.7.	Securitisation risk..................................................................................................	15
	3.8.	Business risk.........................................................................................................	16
	3.9. Interest rate risk (in non-trading book)...................................................................	17
	3.10.	Pension obligation risk.......................................................................................	18
	3.11.	Group risk..........................................................................................................	19
	3.12.	Reputational risk................................................................................................	20
	3.13.	Insurance risk ....................................................................................................	21
4.	Capital resources .........................................................................................................	22
	4.1.	Own funds ............................................................................................................	22
	4.2.	Capital requirements.............................................................................................	22
5.	Code staff aggregate remuneration..............................................................................	23

2

Ashmore Group plc Pillar 3 disclosures

1. Overview

The purpose of this document is to provide the Pillar 3 disclosures for Ashmore Group plc (hereafter, Ashmore, the Group). The disclosures on risk management and capital resources are as at the Group's most recent financial year end, 30 June 2019.

The disclosures include the principal Financial Conduct Authority (FCA) regulated entities, Ashmore Investment Management Limited (AIML) and Ashmore Investment Advisors Limited (AIAL), which are both limited licence BIPRU €50k firms.

Ashmore is supervised on a consolidated basis in the United Kingdom by the FCA. The method of consolidation used for prudential purposes is the same as that used for the Group's consolidated financial statements. The disclosures included in this document relate to the Group.

1.1. Basis of disclosures

The Group benefits from the FCA Capital Requirements Regulation derogation allowing it to carry forward the CRD III rules as at 31 December 2013 and as such, the following disclosures are in accordance with the requirements of Chapter 11 of the prudential sourcebook for Banks, Building Societies and Investment Firms (BIPRU). The disclosures cover both the qualitative and quantitative requirements.

The Group, as a limited licence BPRU €50k firm, is obliged to meet the requirements of the Basel capital adequacy framework, which consists of three pillars:

• Pillar 1 sets out the prescribed, rule-based minimum capital requirement, being the higher of i) the sum of the market and credit risk requirements, and ii) the fixed overhead requirement;
• Pillar 2 requires a firm to make an assessment of its capital requirements; and
• Pillar 3 complements Pillars 1 and 2, and requires a firm to disclose details of its risks, risk management processes and capital position.

1.2. Frequency of disclosures

The Group has an accounting reference date of 30 June and in accordance with BIPRU 11.3.8, publishes its disclosures as soon as practicable after publication of the Annual Report and Accounts and, if appropriate, more frequently.

1.3. Media and location of disclosures

These Pillar 3 disclosures are published on the Group's website: www.ashmoregroup.com/investor- relations/reports-presentations.

3

Ashmore Group plc Pillar 3 disclosures

2. Corporate governance and risk management

In accordance with the principles of the UK Corporate Governance Code, the Ashmore Group plc Board (hereafter, the Board) is ultimately responsible for the Group's risk management and internal control systems and for reviewing their effectiveness. Such systems and their review are designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not absolute assurance against material misstatement or loss.

2.1. Governance framework

Ashmore is exposed to a variety of risks as a consequence of its business activities. The Board has ultimate responsibility for the Group's risk management strategy and determines the Group's risk appetite and tolerance levels within which the business can operate. Active and effective management of the emerging and principal risks within the business model is critical to the successful performance of the business. The Board has set out a corporate governance framework through which it aims to maintain full and effective control over appropriate strategic, financial, operational and compliance issues. Within this, an internal control framework allows the Group to assess the effectiveness of its risk management and internal control systems.

The Group's system of internal control is integrated with the Group's strategy and business model and embedded within its routine business processes and operations, and a strong control culture is combined with clear management responsibility and accountability for individual controls. The internal control framework provides a process for identifying, evaluating and managing the Group's emerging and principal risks. The process is reviewed regularly by the Group's Audit and Risk Committee (ARC).

2.2. Risk management framework

Ashmore's risk management framework sets out to identify, monitor, report and manage risk throughout the Group. The framework is designed to embed an awareness of risk into all strategic and operational business decisions.

4

Ashmore Group plc Pillar 3 disclosures

Three lines of defence

The risk management framework operates using a 'three lines of defence' model, ensure that ownership and accountability for identifying, monitoring and mitigating risk remains with each department head with independent oversight by key control functions forming an additional layer of control.

• The first line is risk ownership and rests with the various business departments, who are responsible for the operation of their processes and for upholding a robust control environment at all times.
• The second line is risk control and is provided by the Risk management and Compliance functions, which independently and actively monitor the effectiveness of the control environment in order to flag to senior management where it may not be operating as expected.
• The third line is independent assurance represented by the Group's internal audit function, which operates under an independent mandate and provides assurance to senior management, the Board and the ARC over agreed risk management, internal control and governance processes as well as recommendations to improve the effectiveness of these processes.

Risk management policies

Ashmore has core values and policies that together comprise the Group's high-level principles and controls, with which all staff are expected to comply. These policies are documented clearly within manuals of policies and procedures that are applicable to all business units and address the key risk categories described on page 8 of this document. Procedures are in place for reporting weaknesses and for monitoring corrective action. Equally, the Group upholds a code of business conduct with procedures for reporting compliance therewith and has in place a defined operational framework and organisational structure with appropriate delegation of authority and segregation of duties with accountability that has regard to acceptable levels of risk.

Risk management processes

The key processes within the risk management framework include:

• a planning framework, which incorporates a Board-approved strategy with objectives for each business unit;
• engagement of key stakeholders at the functional, business and executive levels of the organisation and accordingly, the Group's risk appetite statement (and its associated components) is regularly reviewed and updated in line with the evolving strategy, business model, financial capacity, business opportunities, regulatory constraints and other internal and external factors;
• the Operating Committee regularly reviews the Group's financial and operating performance to focus on delivery of the Group's strategic objectives;
• preparation and discussion of detailed investment reports at each of the sub-committee meetings of the Group's investment committees, which take place weekly, monthly or quarterly depending on investment theme, with follow up actions agreed and implemented within a strict operational framework;
• the Group's Pricing and Oversight Committee (POC) supervises the effectiveness of pricing policies for all investments held in Ashmore sponsored funds where a reliable pricing source is available. This includes the responsibility to ensure that appointed third-party pricing agents carry out the agreed pricing policy faithfully and manage the pricing sources appropriately;

5