Ally Bank 2011 Annual Report Download - page 89

Table of Contents
Management's Discussion and Analysis
Ally Financial Inc. • Form 10−K
rates, the impact of the change in interest rates on the commercial loans with rate index floors and balance sheet growth increasing the absolute level of net
interest income. Additionally, we added net pay fixed interest rate swaps hedging certain borrowings and reduced our net receive fixed interest rate swaps
hedging the debt portfolio as part of our normal ALM activities, which contributed to the change.
Operational Risk
We define operational risk as the risk of loss resulting from inadequate or failed processes or systems, human factors, or external events. Operational
risk is an inherent risk element in each of our businesses and related support activities. Such risk can manifest in various ways, including errors, business
interruptions, and inappropriate behavior of employees, and can potentially result in financial losses and other damage to us.
To monitor and control such risk, we maintain a system of policies and a control framework designed to provide a sound and well−controlled
operational environment. This framework employs practices and tools designed to maintain risk governance, risk and control assessment and testing, risk
monitoring, and transparency through risk reporting mechanisms. The goal is to maintain operational risk at appropriate levels in view of our financial
strength, the characteristics of the businesses and the markets in which we operate, and the related competitive and regulatory environment.
Notwithstanding these risk and control initiatives, we may incur losses attributable to operational risks from time to time, and there can be no
assurance these losses will not be incurred in the future.
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