HSBC 2015 Annual Report Download - page 268

Report of the Directors: Corporate Governance (continued)
Board committees
HSBC HOLDINGS PLC
266
Group Risk Committee
I am pleased to present the 2015 report of the Group Risk
Committee (‘GRC’). 2015 was a particularly busy year for the
GRC. In addition to its regular reviews of the Group’s risk map,
risk appetite and top and emerging risks, the GRC focused on the
management of current and forward-looking risks, programmes
to implement comprehensive reforms to the ways financial crime
compliance is managed and the execution of Global Standards.
The GRC has closely monitored the strengthening of the risk
framework for managing and mitigating operational risk, as this
now represents a greater proportion of the Group’s capital
demands.
The GRC held three additional meetings during the year
dedicated to reviewing the results of BoE’s stress tests, reviewing
the lessons learned from the BoE and internal stress testing
exercises and proposals for enhancing the Group’s stress testing
capability.
During the year, the GRC also reviewed management’s
assessment of information security, cyber-crime and data
management risks and management’s mitigating actions.
Like the Group Audit Committee, the GRC has taken steps to
enhance its governance arrangements with the regional and
business risk committees to ensure closer interaction and
dialogue across the Group.
I should like to thank my colleagues on the Committee and senior
management for their contribution to the Committee’s activities.
Joachim Faber Chairman
Group Risk Committee
22 February 2016
Members
Joachim Faber (Chairman)
John Lipsky
Rachel Lomax
Heidi Miller
Role and responsibilities
The role and responsibilities of the GRC are set out in its
terms of reference. Its terms of reference can be found on
our website at http://www.hsbc.com/about-
hsbc/corporate-governance/board-committees.
The key areas of responsibility for the GRC include:
• advising the Board on high-level risk-related matters
and risk governance, including current and forward
looking risk exposures, future risk strategy and
management of risk within the Group;
• advising the Board on risk appetite and risk tolerance;
• reviewing the effectiveness of the Group’s risk
management systems framework and internal control
systems (other than internal financial control systems
which is the responsibility of the GAC);
• monitoring executive control and management of risk
including top and emerging risks; and
• advising the Group Remuneration Committee on the
alignment of remuneration with risk appetite.
Governance
The GRC has overall non-executive responsibility for the
oversight of risk across the Group.
All of HSBC’s activities involve the measurement,
evaluation, acceptance and management of risk or
combinations of risks. The Board, advised by the GRC,
requires and promotes a strong risk governance culture
which shapes the Group’s attitude to risk. The Board
and the GRC oversee the maintenance and development
of a strong risk management framework by continually
monitoring the risk environment, top and emerging risks
facing the Group and mitigating actions planned and taken.
Oversight of specific areas of risk is undertaken by the
Conduct & Values Committee (page 272) to ensure that
HSBC conducts business responsibly and consistently
adheres to HSBC Values and by the Financial System
Vulnerabilities Committee (page 268) for matters relating
to anti-money laundering, sanctions, terrorist financing and
proliferation financing. Both committees regularly update
the GRC on their responsibilities.
The GRC, together with the GAC, has set core terms of
reference for subsidiary company non-executive risk and
audit committees.
During 2015, the GRC held 10 meetings and attendance of
the current GRC members is set out in the table on page
258. The Group Chief Risk Officer, Group Finance Director,
Chief Legal Officer, Group Head of Internal Audit, Global
Head of Regulatory Compliance, Global Head of Financial
Crime Compliance and other members of senior
management attended meetings of the GRC by invitation
to contribute to discussions relating to their respective
areas of expertise. The Chairman of the GRC had meetings
with a number of these attendees separately to discuss
specific issues.
The GRC has worked closely with the GAC to ensure that
any areas of significant overlap are appropriately addressed.
The GRC and the GAC met jointly during 2015 to address
areas of commonality between the committees and to
avoid unnecessary duplication. The committees also
discussed the importance of building strong alignment
with the major regional and global business risk and audit
committees and implemented proposals to improve inter-
committee communication.
A forum for the chairs of the major regional and global
businesses’ audit and risk committees was held in June
2015 which resulted in an enhanced reporting protocol,
providing clearer lines of accountability at Group, regional,
country and business line levels. The operation of this
enhanced protocol will be closely monitored during the
year and reviewed at the next annual forum.
The GRC met with the Group Chief Risk Officer and Group
Head of Internal Audit without the presence of management.
The GRC Chairman reported matters of significance to the
Board after each meeting and the minutes of the meetings
were made available to all Board members.
How the Committee discharged its responsibilities
The GRC reviewed the Group Risk Appetite Statement, the
risk map (which describes the Group’s risk profile by risk
type across the global businesses) and monitored the top
and emerging risks (together with mitigating actions for
identified risks) with management at each of its meetings.