Barclays 2011 Annual Report Download - page 18

Risk management
Banking involves risks that must be understood
and managed to successfully deliver sustainable
returns and play our key role in supporting
wider economic growth.
Risk management
Barclays has clear risk management objectives and a well-established
strategy to deliver them, through core risk management processes.
Responsibility for risk management resides at all levels within the
Group, from the Board and the Executive Committee down through
the organisation to each business manager and risk specialist. Barclays
distributes these responsibilities so that risk/return decisions are taken
at the most appropriate level: as close as possible to the business, and
subject to robust and effective review and challenge.
Risk appetite, which is the level of risk Barclays is prepared to sustain
whilst pursuing its business strategy, is approved by the Board. Financial
Risk Committee, Treasury Committee, Operational Risk Committee and
Tax Risk Committee monitor their relevant risk profiles against risk
appetite and the output is presented to the Board Risk Committee.
Management assurance processes are assessed by Barclays Internal
Audit and the effectiveness of the Group’s control framework is
assessed by the Governance and Control Committee.
During 2011, the Principal Risk Policy, which covers the categories of risk
to which Barclays has its most significant actual or potential exposures,
was updated resulting in risks being grouped into four categories: Credit,
Market, Funding and Operational. Each risk owned is by a Group Principal
Risk Owner, who is a senior individual within the Group Risk function.
There was no significant change to the underlying risk types monitored
as a result of this regrouping.
Performance in 2011
Loan impairment charges reduced 33% on 2010 reflecting the generally
improving underlying trends across the retail and wholesale businesses.
The Group loan loss rate decreased to 77bps (2010: 118bps), which was
a very strong performance for this point in the economic cycle.
Retail loan impairment decreased as portfolio quality improved across
almost all businesses. This included lower charges in our cards businesses
in the UK and internationally. Similarly, impairment rates in unsecured
loans and mortgages remained very moderate in the domestic and
international markets.
Loan impairment also dropped in our wholesale portfolios across all
businesses. Our corporate portfolios in Spain and Portugal remained under
pressure from the difficult economic environment in those countries.
Key developments in relation to capital funding and liquidity are covered
in the Finance Director’s review on page 22.
Market exposures decreased in 2011 although there was a moderate
increase in daily value at risk due to higher market volatility.
There have been no significant changes in our operational risk profile
during 2011.
Our impairment performance and asset
quality continued to improve in spite of the
difficult economic environment.
Robert Le Blanc
Chief Risk Officer
16 Barclays PLC Annual Report 2011 www.barclays.com/annualreport