RBS 2012 Annual Report Download - page 21

An integral role for Risk Management
Risk Management is essential to making
RBS safe and sustainable. A strong culture
of risk management and control provides
the foundation for this.
Financial strength and resilience are at the
heart of our Strategic Plan. The plan targets a
credit rating in line with those of our strongest
peers, without government support.
In 2009, the Group Board set four strategic
risk objectives aligned to the Strategic Plan.
These are to:
maintain capital adequacy;
deliver stable earnings growth;
ensure stable and efficient access to
funding and liquidity; and
maintain stakeholder confidence.
These strategic risk objectives link the Group’s
business strategy to the way we set risk
appetite and manage risk in our business.
We set risk appetite at Group level.
This establishes the level and type of risks
that we are able and willing to take to meet our
strategic objectives and our wider obligations
to stakeholders.
We cascade and embed this risk appetite
across the Group, allowing:
each business to understand its acceptable
levels of risk; and
commercial strategies to be aligned with
the use of available financial resources.
By setting a clear risk appetite and embedding
a strong risk culture throughout our businesses,
we can identify, measure and control risk
exposures and respond effectively to shocks.
Key developments in 2012
In 2012, we continued to strengthen our
approach to risk management amidst a
challenging and ever-changing external
environment. Areas of progress included:
refining our understanding of the risks we
face and their scale;
reducing our exposures in line with our
objective of being safe and sustainable;
improving the quality of our data, including
forward-looking measures;
developing a framework for the effective
management of our conduct risk;
strengthening our credit risk and country risk
appetite and management frameworks and
ensuring consistent application across the
Group; and
further realigning our Group Policy Framework
to our business model and continuing
assurance.
In the table on the following page, we summarise
the risks we face. We provide a more detailed
discussion of developments in 2012 in the
‘Risk and balance sheet management’ section of
the Annual Report and Accounts.
Our approach to
risk management
This is how we bring the Strategic Plan to life in our management of risk.
Strategic risk objectives
Key risk appetite measures
Key frameworks and limits
Day-to-day risk management
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RBS GROUP 2012