Barclays 2010 Annual Report Download - page 165

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The Board Risk Committee terms of reference are
available from the corporate governance section of our
website at: www.barclays.com/corporategovernance
David Booth, who became Chairman of the Board Risk Committee on 1st January 2010, now reports on that Committee’s activities during 2010.
Board Risk Committee Chairman’s report
Member Independent
Meetings
eligible to
attend
Meetings
attended
David Booth (Chairman) I77
Sir Richard Broadbent
(to 30th September 2010) I33
Reuben Jeffery
(from 1st January 2010) I77
Sir Andrew Likierman I76
Dambisa Moyo
(from 1st October 2010) I42
Sir Michael Rake I76
Secretary
Lawrence Dickinson
Key
OA on appointment
I independent
I succeeded Sir Richard Broadbent as Chairman of the Board Risk
Committee in January 2010. I am grateful to Sir Richard for his work in
leading the Committee during the difficult period of the financial crisis
and for his continuing support until he left the Committee at the end
of September 2010. My report on the Committee’s work during 2010
is set out below.
What is our role?
As a bank, Barclays is in the business of taking risk: taking appropriate
levels of credit, market, capital and liquidity risk is how we generate
profits. The Board Risk Committee is responsible for recommending
to the Board the total level of risk the Group is prepared to take (risk
appetite). We monitor risk appetite, setting limits for individual types
of risk, e.g., credit risk and market risk, and we monitor the Group’s risk
profile. We obtain assurance from management that principal risks
have been properly identified and are being appropriately managed.
Following the publication in late 2009 of the Walker Report into Corporate
Governance in Banks and other Financial Institutions (the Walker Report),
our remit has expanded to include ensuring that risk is taken into account
during the due diligence phase of any strategic transaction and we also
provide input from a risk perspective into the deliberations of the Board
Remuneration Committee. The Committee’s full terms of reference
are available from the corporate governance section of our website
at: www.barclays.com/corporategovernance. More information on risk
management and the internal control framework can be found in the
Risk management report on pages 66 to 142.
Who are the Committee?
The table above sets out the membership of the Committee and their
attendance at meetings held in 2010. Both Sir Andrew Likierman and Sir
Michael Rake also serve on the Board Audit Committee, which provides
a useful insight into the work of that Committee to ensure there is no
under- or overlap in the work of the respective committees. The Group
Finance Director, Chief Risk Officer, Group General Counsel and Chief
Internal Auditor attend each Committee meeting, as does the lead audit
partner from our external auditor. Senior executives from each of our
principal businesses attend meetings at our request and senior members
of the Group Risk team attend frequently to present on specific matters.
What did we do in 2010?
We met seven times in 2010 and the chart on page 164 shows how we
allocated our time at our meetings. Two of the meetings were arranged
at short notice and it was not possible for all members to attend,
although they had the opportunity to review the meeting papers and
raise any points with the Group Risk team or with me as Chairman.
Since becoming Chairman, I have been keen to ensure that the Committee
remains at the forefront of best practice. While the Committee has been in
place since 1999, well before the recommendations of the Walker Report,
the working practices of the Committee continue to evolve. In late 2009,
we asked PwC to carry out a review of how the Committee had operated
during the period of the financial crisis, to assess whether the Committee
had operated effectively and whether there is anything it could do
differently. The outputs of the review were shared with the full Board in
early 2010. The review concluded that there had been no major failings
in the operation of the Committee and that it had identified the issues on
a timely basis. Some suggestions for improvements were put forward,
including developing a more systematic process for agreeing what risks
should be reviewed in greater detail by the Committee and a more formal
process for escalating issues raised at the various management risk
committees. Robert Le Blanc, the Chief Risk Officer, has a dotted reporting
line to me as Chairman of the Committee and I met with Robert regularly
during the year to discuss matters to be considered at Committee
meetings and to get his views on the issues on which the Committee
should focus its time.
During the year we implemented a number of the recommendations
arising from the Walker Report. Early in 2010, we appointed a panel
of retained advisers, who we can call on for an independent view of
matters, should we feel it appropriate to do so. During the year, we
used an external consultant to carry out an independent review of risk
in remuneration, with a particular focus on the remuneration framework,
the risk metrics used to assess financial performance and the role of
the Group Risk Function in the remuneration process. The review
demonstrated that we have a good, comprehensive set of risk metrics,
particularly quantitative metrics, and that the proposals for 2010 for
risk adjustments to assess financial performance and the role of the risk
function in remuneration decisions are in line with regulatory requirements.
Suggested areas for improvement included strengthening our qualitative
risk metrics and increasing communication and awareness of the role of
risk metrics in remuneration.
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