HSBC 2011 Annual Report Download - page 235

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Overview Operating & Financial Review Corporate Governance Financial Statements Shareholder Information
past three years is disclosed in Note 8 on the
Financial Statements.
The Board has approved, on the
recommendation of the Committee, a policy for
the employment by HSBC of former employees
of KPMG and an annual report is received by the
Committee on such former employees who are
employed and the number in senior positions. This
report enables the Committee to consider whether
there has been any impairment, or appearance of
impairment, of the external auditor’s judgement or
independence in respect of the audit.
The policies for the pre-approval of specific
services that may be provided by the principal
auditor are kept under review by the Committee and
amended as necessary to meet the dual objectives of
ensuring that we benefit in a cost effective manner
from the cumulative knowledge and experience of
our auditor, while also ensuring that our external
auditor maintains the necessary degree of
independence and objectivity. These pre-approval
policies apply to all services where any HSBC
company pays for the service, or is a beneficiary
or addressee of the service, and has selected or
influenced the choice of KPMG. All services
provided by KPMG during 2011 were pre-approved
by the Committee or were entered into under pre-
approval policies established by the Committee.
The pre-approved services relate to regulatory
reviews, agreed-upon procedures reports, other types
of attestation reports, the provision of advice and
other non-audit services allowed under SEC
independence rules. The services fall into the
categories of audit services, audit-related services,
tax services and other services.
Group Risk Committee
The GRC is responsible for advising the Board on
high-level risk-related matters and risk governance
and for non-executive oversight of risk management
and internal controls (other than over financial
reporting).
Members1 Meetings attended
R A Fairhead (Chairman)2 4
J D Coombe3 6
J W J Hughes-Hallett 5
J R Lomax 5
Meetings held in 2011 6
1 All members are independent non-executive Directors.
2 Took a temporary leave of absence due to illness. Resumed
the role of Chairman in January 2012.
3 Chaired all meetings in 2011 as acting Chairman.
John Trueman, a non-executive director of
HSBC Bank plc and Chairman of its risk and audit
committees, has been invited by the GRC to attend
its meetings. His experience of risk-related matters
in the financial services industry is valued by the
Committee.
Governance
All of HSBC’s activities involve, to varying degrees,
the measurement, evaluation, acceptance and
management of risk or combinations of risks. The
Board, advised by the Committee, requires and
encourages a strong risk governance culture which
shapes the Group’s attitude to risk. The Board and
the Committee oversee the maintenance and
development of a strong risk management
framework by the continual monitoring of the risk
environment and top and emerging risks facing the
Group, and mitigating actions planned and taken.
The Committee monitors the effectiveness of
the Group’s risk management and internal controls
other than controls over financial reporting, which
are monitored by the GAC.
The governance structure for the management
of risk at HSBC is set out below. Similar governance
arrangements are in place in major operating
subsidiaries.