Barclays 2011 Annual Report Download - page 70

Risk management
Barclays risk management strategy
At a strategic level, our risk management objectives are to:
– Identify the Group’s significant risks;
– Formulate the Group’s risk appetite and ensure that business profile
and plans are consistent with it;
– Optimise risk/return decisions by taking them as closely as possible
to the business, while establishing strong and independent review and
challenge structures;
– Ensure that business growth plans are properly supported by effective
risk infrastructure;
– Manage risk profile to ensure that specific financial deliverables remain
possible under a range of adverse business conditions; and
– Help executives improve the control and co-ordination of risk taking
across the business.
The Group’s approach is to provide direction on: understanding the
principal risks to achieving Group strategy; establishing risk appetite; and
establishing and communicating the risk management framework. The
process is then broken down into five steps: identify, assess, control, report
and manage/challenge. Each of these steps is broken down further, to
establish end-to-end activities within the risk management process and
the infrastructure needed to support it (see panel below). The Group’s risk
management strategy is broadly unchanged from 2010.
Assigning responsibilities
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. The responsibilities
for effective review and challenges reside with senior managers, risk
oversight committees, Barclays Internal Audit, the independent Group
Risk function, the Board Risk Committee and, ultimately, the Board.
The Board is responsible for approving risk appetite (see page 71), which
is the level of risk the Group chooses to take in pursuit of its business
objectives. The Chief Risk Officer regularly presents a report to the Board
summarising developments in the risk environment and performance
trends in the key portfolios. The Board is also responsible for the Internal
Control and Assurance Framework (Group Control Framework). It oversees
the management of the most significant risks through the regular review
of risk exposures and related key controls. Executive management
responsibilities relating to this are set via the Group’s Principal Risks Policy.
Barclays risk management strategy
Barclays has clear risk management objectives and a well-established strategy to deliver them,
through core risk management processes.
Steps Activity
Identify – Establish the process for identifying and understanding business-level risks.
Assess – Agree and implement measurement and reporting standards and methodologies.
Control – Establish key control processes and practices, including limit structures, impairment allowance
criteria and reporting requirements.
– Monitor the operation of the controls and adherence to risk direction and limits.
– Provide early warning of control or appetite breaches.
– Ensure that risk management practices and conditions are appropriate for the business
environment.
Report – Interpret and report on risk exposures, concentrations and risk-taking outcomes.
– Interpret and report on sensitivities and Key Risk Indicators.
– Communicate with external parties.
Manage and Challenge – Review and challenge all aspects of the Group’s risk profile.
– Assess new risk-return opportunities.
– Advise on optimising the Group’s risk profile.
– Review and challenge risk management practices.
68 Barclays PLC Annual Report 2011 www.barclays.com/annualreport