GE 2009 Annual Report Download - page 35

’   
GE 2009 ANNUAL REPORT 33
GECS RISK MANAGEMENT AND OVERSIGHT
GECS has developed a robust risk infrastructure and processes
to manage risks related to its businesses and the GE Corporate
Risk Function relies upon them in fulfillment of its mission. As
discussed above, the GE Audit Committee oversees GECS’ risk
assessment and management processes.
At the GECS level, the GECS Board of Directors oversees the
GECS risk management process, and approves all significant
acquisitions and dispositions as well as significant borrowings and
investments. All participants in the GECS risk management process
must comply with approval limits established by the GECS Board.
GE Capital has established an Enterprise Risk Management
Committee (ERMC), comprising the most senior leaders in GE
Capital, which has oversight responsibility for identifying, assess-
ing, mitigating and monitoring risk across the entire GE Capital
enterprise, including credit, market, operational, legal & compli-
ance, liquidity and funding risk. GE Capital, in coordination with
and under the oversight of the GE CRO, provides comprehensive
risk reports to the GE Audit Committee. At these meetings, which
will occur at least four times a year, GE Capital senior management
will focus on the risk strategy and financial services portfolio,
including the risk oversight processes used to manage all the
elements of risk managed by the ERMC.
GE Capital’s risk management approach rests upon three major
tenets: a broad spread of risk based on managed exposure limits;
senior, secured commercial financings; and a hold to maturity
model with transactions underwritten to “on-book” standards.
Dedicated risk professionals across the businesses include
underwriters, portfolio managers, collectors, environmental and
engineering specialists, and specialized asset managers who
evaluate leased asset residuals and remarket off-lease equipment.
The senior risk officers have, on average, over 25 years of
experience.
Additional information about our liquidity and how we manage
this risk can be found in the Financial Resources and Liquidity
section and in Notes 10 and 22. Additional information about
our credit risk and GECS portfolio can be found in the Financial
Resources and Liquidity and Critical Accounting Estimates sections
and Notes 1, 3, 6, 22 and 24.
Segment Operations
Our five segments are focused on the broad markets they serve:
Energy Infrastructure, Technology Infrastructure, NBC Universal,
Capital Finance and Consumer & Industrial. In addition to providing
information on segments in their entirety, we have also provided
supplemental information for certain businesses within the
segments for greater clarity.
Segment profit is determined based on internal performance
measures used by the Chief Executive Officer to assess the
performance of each business in a given period. In connection
with that assessment, the Chief Executive Officer may exclude
matters such as charges for restructuring; rationalization and
other similar expenses; in-process research and development
and certain other acquisition-related charges and balances;
technology and product development costs; certain gains and
losses from acquisitions or dispositions; and litigation settle-
ments or other charges, responsibility for which preceded the
current management team.
Segment profit always excludes the effects of principal pen-
sion plans, results reported as discontinued operations, earnings
attributable to noncontrolling interests of consolidated subsidiaries
and accounting changes. Segment profit excludes or includes
interest and other financial charges and income taxes according to
how a particular segment’s management is measured — excluded
in determining segment profit, which we sometimes refer to
as “operating profit,” for Energy Infrastructure, Technology
Infrastructure, NBC Universal and Consumer & Industrial; included
in determining segment profit, which we sometimes refer to as
“net earnings,” for Capital Finance.
We have reclassified certain prior-period amounts to conform
to the current-period’s presentation. For additional information
about our segments, see Note 27.