HSBC 2011 Annual Report Download - page 236

HSBC HOLDINGS PLC
Report of the Directors: Corporate Governance (continued)
Board committees > Group Risk Committee
234
Authority Membership Responsibilities
Board Executive and non-executive
Directors
• Approves risk appetite, strategy and performance targets
for the Group
• Approves appointment of senior risk officers
• Delegates authority for risk management
GRC Independent non-executive Directors • Advises the Board on:
– risk appetite and alignment with strategy
– alignment of remuneration with risk appetite (through
the Group Remuneration Committee)
– risks associated with proposed strategic acquisitions and
disposals
• Reviews the effectiveness of the Group’s systems of risk
management and internal controls (other than over
financial reporting)
• Oversees the maintenance and development of a
supportive culture in relation to the management of risk
Risk Management Meeting Group Chief Risk Officer
Group Chief Executive
Group Finance Director
Senior management
• Formulates high-level Group risk policy
• Exercises delegated risk management authority
• Oversees implementation of risk appetite and controls
• Monitors all categories of risk and determines appropriate
mitigating action
Global Risk Management Board Group Chief Risk Officer
Chief Risk Officers of HSBC’s global
businesses and regions
Heads of risk areas within the Global
Risk Function
• Supports the Risk Management Meeting and the Group
Chief Risk Officer in providing strategic direction for the
Global Risk function, sets priorities and oversees their
execution
• Oversees consistent approach to accountability for, and
mitigation of, risk across the Global Risk function
Subsidiary board committees
responsible for risk-related matters
Independent non-executive directors
and other independent members
• Provides certification to the GRC or intermediate risk
committee on risk-related matters and internal controls
(other than over financial reporting) of relevant
subsidiaries
Risk reporting and monitoring
The GRC regularly monitors:
• the Group’s risk appetite and risk profile against
key performance/risk indicators, as set out in the
Group’s Risk Appetite Statement, on a Group-
wide, global business and regional basis;
• the top and emerging risks facing the Group;
and
• the risk profiles for separate categories of risk
within the Group’s business identified in the
Group’s Risk Appetite Statement, on a Group-
wide, global business and regional basis;
and reviews the mitigating actions proposed by
management.
Reports on these items are presented at each
meeting of the Committee. Regular reports from the
Risk Management Meeting, which is the executive
body responsible for overseeing risk, are also
presented.
In carrying out its responsibilities the
Committee is closely supported by the Group Chief
Risk Officer. The Committee also receives regular
presentations from the Group Head of Compliance,
Group Head of Internal Audit and other business,
function and risk heads.
Risk appetite
Risk appetite is a key component of our management
of risk. The Board, advised by the GRC, approves
the Group’s risk appetite, which describes the types
and levels of risk that the Group is prepared to
accept in executing our strategy and which is set out
in the Group’s Risk Appetite Statement. Embedding
the Risk Appetite Statement and the related
monitoring and reporting framework across the
Group has continued to be an area of significant
focus in 2011 with initiatives undertaken to establish
and develop:
• Risk Appetite Statements for regions and global
businesses, which are aligned with Group
strategy and the Group’s risk appetite; and
• reporting of risk appetite profile against the key
performance/risk indicators set out in those Risk
Appetite Statements to the Risk Management
Meeting and to the GRC.