RBS 2012 Annual Report Download - page 120

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Business review Risk and balance sheet management continued
Risk appetite and risk governance: Risk governance* continued
The key risk responsibilities of each of these committees as well as their
membership are set out in the table below. Further information on the
Group Board and Board Committees is available on page 297.
These committees are supported at a divisional level by a risk
governance structure embedded in the business. These committees play
a key role in ensuring that the Group’s risk appetite is supported by
effective risk management frameworks, limits and policies, together with
clear accountabilities for approval, monitoring, oversight, reporting and
escalation.
During 2012, the Conduct Risk Committee was created as a sub-
committee of the Executive Risk Forum. Effective conduct risk
management is not only a commercial imperative for the Group;
customers, clients and counterparties demand it as a precursor to
building trust. For more information on conduct risk and the Group’s
management of this risk type, refer to page 290.
Board/Committee Risk focus Membership
Group Board The Group Board ensures that the Group manages risk
effectively by approving and monitoring the Group’s risk
appetite, considering Group stress scenarios and agreed
mitigants and identifying longer-term strategic threats to the
Group’s business operations.
The Board of directors
Executive Committee
The Executive Committee considers recommendations on
risk management matters referred by the Executive Risk
Forum and/or Group Risk Committee, including
recommendations on risk appetite, risk policies and risk
management strategies. It operates under delegated
authority from the Group Board.
Group Chief Executive
Group Finance Director
Chief Administration Officer
Chief Executive Officers of divisions
Head of Restructuring and Risk
Board Risk Committee The Board Risk Committee provides oversight and advice to
the Group Board on current and potential future risk
exposure of the Group and risk strategy. It reviews the
Group’s performance on risk appetite, oversees the
operation of the Group Policy Framework and provides a risk
review of remuneration arrangements. It operates under
delegated authority from the Group Board.
At least three independent non-executive directors,
one of whom is the Chairman of the Group Audit
Committee.
Group Audit Committee The Group Audit Committee reviews accounting policies,
financial reporting and regulatory compliance practices of the
Group, as well as its systems and standards of internal
controls and monitors the Group’s processes for internal
audit and external audit. It has responsibility for monitoring
relationships with regulatory authorities. It operates under
delegated authority from the Group Board.
At least three independent non-executive directors, at
least one of whom is a financial expert as defined in
the SEC rules under the US Exchange Act.
Group Performance and
Remuneration Committee
The Group Performance and Remuneration Committee has
oversight of the Group’s policy on remuneration and receives
advice from RBS Risk Management and the Board Risk
Committee to ensure that there is thorough risk input into
incentive plan design and target setting, as well as risk
review of performance bonus pools and clawback. It
operates under delegated authority from the Group Board.
At least three independent non-executive directors
Group Sustainability
Committee
The Group Sustainability Committee is responsible for
overseeing and challenging how management is addressing
sustainability and reputation issues related to all stakeholder
groups. This includes customer and related citizenship
activities, oversight of the delivery of the Purpose, Vision and
Values cultural and behavioural change, and oversight of the
sustainability aspects of the people agenda. It operates
under delegated authority from the Group Board.
Independent non-executive directors
*unaudited