GE 2014 Annual Report Download - page 128

108 GE 2014 FORM 10-K
RISK MANAGEMENT
A disciplined approach to risk is important in a diversified organization like ours in order to ensure that we are executing
according to our strategic objectives and that we only accept risk for which we are adequately compensated. We evaluate risk
at the individual transaction level, and evaluate aggregated risk at the customer, industry, geographic and collateral-type
levels, where appropriate.
RESPONSIBILITIES
GE BOARD OF DIRECTORS
The GE Board of Directors (Board) has oversight for risk management with a focus on the most significant risks facing the
Company, including strategic, operational, financial and legal and compliance risks. At the end of each year, management and
the Board jointly develop a list of major risks that GE plans to prioritize in the next year. Throughout the year, the Board and
the committees to which it has delegated responsibility dedicate a portion of their meetings to review and discuss specific risk
topics in greater detail. Strategic, operational and reputational risks are presented and discussed in the context of the CEO’s
report on operations to the Board at regularly scheduled Board meetings and at presentations to the Board and its committees
by the vice chairmen, GE and GECC Chief Risk Officers (CROs), general counsel and other employees.
COMMITTEES
The Board has delegated responsibility for the oversight of specific risks to Board committees as follows:
THE AUDIT COMMITTEE oversees GE’s and GE Capital’s policies and processes relating to the financial statements, the
financial reporting process, compliance and auditing. The Audit Committee, in coordination with the GE Risk Committee,
discusses with management the Company’s risk assessment and risk management practices and, when reviewing and
approving the annual audit plan for the internal audit functions, prioritizes audit focus areas based on their potential risk to the
Company. The Audit Committee oversees the Company’s cybersecurity program and related risks, and monitors ongoing
compliance issues and matters. The Audit Committee jointly meets with the GECC Board once a year, which is in addition to
an annual joint meeting of the GE Risk Committee and Audit Committee.
THE GOVERNANCE & PUBLIC AFFAIRS COMMITTEE oversees risk related to the Company’s governance structure
and processes and risks arising from related-person transactions, reviews and discusses with management risks related to
GE’s public policy initiatives and activities, and monitors the Company’s environmental, health and safety compliance and
related risks.
THE MANAGEMENT DEVELOPMENT & COMPENSATION COMMITTEE oversees the risk management associated
with management resources, structure, succession planning, management development and selection processes, and
includes separate reviews of incentive compensation arrangements at GE and GE Capital to confirm that incentive pay does
not encourage unnecessary and excessive risk taking and to review and discuss, at least annually, the relationship between
risk management policies and practices, corporate strategy and senior executive compensation. The Management
Development and Compensation Committee also incentivizes leaders to improve the Company's competitive position.
THE SCIENCE & TECHNOLOGY COMMITTEE oversees the direction and effectiveness of the company’s R&D
operations. They also review the company’s technology and innovation strategies and approaches, including the impact on the
company’s performance, growth and competitive position. The Science & Technology Committee assist the Board in
overseeing GE’s investments and initiatives in science, technology and software. In addition, they review science and
technology trends that could significantly affect the company and the industries in which it operates.
THE GE RISK COMMITTEE oversees risks related to GE Capital and jointly meets throughout the year with the GECC
Board of Directors (GECC Board). The GE Risk Committee also oversees the Company's most critical enterprise risks and
how management is mitigating these risks. These risks may be discussed during Risk Committee meetings, as well as full
Board updates, Audit Committee updates, and/or during Director business visits.