RBS 2010 Annual Report Download - page 246

Board Risk Committee Report by Philip Scott, Chairman
Membership
Ihave been Chairman of the Board Risk Committee since its formation in
January 2010, and I am a member of the Committee along with Colin
Buchan, Sandy Crombie, Brendan Nelson and Joe MacHale. We all
served throughout 2010 with the exception of Brendan Nelson who
became a member of the Committee with effect from 1 April 2010. All
members of the Board Risk Committee are independent non-executive
directors. Attendance of each member at meetings of the Board Risk
Committee in 2010 is shown on page 238.
Archie Hunter was a member of the Board Risk Committee until 28 April
2010 when he stood down as a non-executive director at the end of his
existing term.
Colin Buchan, Brendan Nelson and I are also members of the Audit
Committee. This common membership ensures effective governance
across all Finance and Risk issues, and that agendas are aligned and
overlap is avoided. The Board Risk Committee and Audit Committee
also have strong links with the Remuneration Committee, with particular
regard to ensuring that relevant Finance and Risk matters are factored in
to the determination of appropriate levels of compensation.
The Board Risk Committee is responsible for:
xproviding oversight and advice to the Group, The Royal Bank of
Scotland plc and National Westminster Bank Plc Boards (the
“Boards”) in relation to current and potential future risk exposures of
the Group and risk strategy, including determination of risk appetite
and tolerance;
xreviewing the performance of the Group relative to risk appetite;
xassisting on such other matters as may be referred to it by the
Boards;
xoversight of the effectiveness of key Group policies, referred to as
the Group Policy Framework;
xpromoting a risk awareness culture within the Group; and
xreporting to the Group Board, identifying any matters within its remit
in respect of which it considers that action or improvement is needed
and making recommendations as to the steps to be taken.
The terms of reference of the Board Risk Committee are available at
www.rbs.com and these are considered annually by the Board Risk
Committee and approved by the Board.
Qualitative and quantitative information regarding the risks arising from
the Group's financial instruments required under International Financial
Reporting Standard 7 are incorporated within the financial statements
and Business review.
Meetings and visits
Atotal of nine meetings of the Board Risk Committee were held during
2010. Meetings are held as soon as practicable prior to Audit Committee
meetings to ensure that the work of the two Committees is coordinated
and consistent. A meeting is held immediately prior to submission of the
interim and annual financial statements to the Board and the quarterly
Interim Management Statements. This core programme is supplemented
by additional meetings as required. Board Risk Committee meetings are
attended by relevant executive directors, risk management, finance
executives and the internal auditors. External advice may be sought by
the Board Risk Committee where considered appropriate.
The Board Risk Committee took part in an annual programme of visits to
the Group's business divisions and control functions in 2010, along with
the Audit Committee. The object of the programme is to allow the Board
Risk Committee and the Audit Committee to gain a better understanding
of the Group and an invitation to attend is extended to all non-executive
directors. The programme of future visits is considered annually. The
Board Risk Committee and the Audit Committee undertook six visits in
2010. These were to the Global Banking & Markets business; the Non-
Core Division, Global Restructuring Group and the Asset Protection
Scheme; Major Change Projects ongoing in the Group; the US Asset-
backed Securities business; Risk Management and the Global Banking &
Markets, Global Transaction Services and Private Banking businesses in
Asia.
Work in 2010
During 2010, the work of the Board Risk Committee focused on a wide
range of matters, including the following key areas:
xrisk strategy and policy;
xrisk profile;
xrisk appetite, framework and limits;
xrisk management operating model; and
xremuneration.
RBS Group 2010244
Corporate governance continued