RBS 2008 Annual Report Download - page 81

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Business review continued
RBS Group Annual Report and Accounts 2008
Management responsibilities (unaudited)
All staff have a role to play in the day to day management of risk, in line
with Group policy, which is set and managed by specialist staff in:
•Risk Management: credit, market, operational, regulatory, enterprise
and insurance risk, together with risk analytics.
•Group Treasury: balance sheet, capital management, intra-group
exposure, funding, liquidity and hedging policies.
Independence underpins the approach to risk management, which is
reinforced throughout the Group by appropriate reporting lines. Risk
Management and Group Treasury functions are independent of the
revenue generating business. As part of the move toward greater
functional independence, the divisional Chief Risk Officers now have a
direct reporting line to the Group Chief Risk Officer.
Group Internal Audit (GIA) supports the GAC in providing an
independent assessment of the design, adequacy and effectiveness of
internal controls.
Risk appetite (unaudited)
Risk and capital management across the Group is based on the risk
appetite set by the Board, which is established through setting strategic
direction, contributing to, and ultimately approving annual plans for each
division and regularly reviewing and monitoring the Group’s
performance in relation to risk through monthly Board reports.
Risk appetite is defined in both quantitative and qualitative terms as
follows:
•Quantitative: encompassing stress testing, risk concentration, value-
at-risk, liquidity and credit related metrics.
•Qualitative: focusing on ensuring that the Group applies the correct
principles, policies and procedures.
Different techniques are used to ensure that the Group’s risk appetite is
achieved.
The GEMC is responsible for ensuring that the implementation of
strategy and operations are in line with the risk appetite determined by
the Board. This is reinforced through a policy framework ensuring that
all staff within the Group make appropriate risk and reward trade-offs
within pre-agreed boundaries.
How we do business Policy
Customers Identifying our customers.
Treating our customers fairly.
Delivering customer value.
Respecting customer confidentiality.
Risks Identifying and managing our risks.
Understanding our markets.
Security Protecting our assets, premises,
systems and data.
Operating our processes, systems
and controls.
Dealing with external suppliers.
People Working in the Group.
Promoting diversity and inclusion.
Reputation Working within laws and regulation.
Investing in the community.
Conducting sustainable business.
Maintaining key services and
processes.
Finances Managing our capital and resources.
Accounting and financial reporting.
The annual business planning and performance management process
and associated activities ensure the expression of risk appetite remains
appropriate. GRC and GALCO support this work.