Barclays 2012 Annual Report Download - page 190

Reputation risk
Reputation risk is the risk of damage to Barclays brand arising from any association, action or inaction which is
perceived by stakeholders to be inappropriate or unethical.
Such damage reduces, directly or indirectly, the attractiveness of Barclays to stakeholders and may lead to negative publicity; loss of revenue;
litigation; regulatory or legislative action; loss of existing and potential client business; reduced workforce morale; and difficulties in recruiting
talent. Sustained reputational damage could have a materially negative impact on our licence to operate and destroy significant shareholder value.
Reputation risk is broadly triggered by failure to comply with either stated or expected norms in two ways:
 As an additional consequence of not applying other risk controls; and
 As a consequence of otherwise inappropriate behaviour, where there is no breach of control, law or regulation, but the decision or behaviour is
generally regarded as unethical or inconsistent with our values.
Assessments of reputation risk cannot be static as they are driven by evolving norms and are composed of risks that can take numerous diverse
forms. For example, risk can arise from:
 Association with controversial clients or sectors: for example, if Barclays provided funding or services to a client connected with (or perceived to
be connected with) controversial activities;
 Operating or doing business in an inappropriate manner: for example, if Barclays paid bribes to secure commercial advantages; and
 Past, present or potential failures in corporate governance or management: for example, if Barclays provided funding or services to clients
without fully implementing anti-money laundering precautions.
Managing reputation risk on a day-to-day basis is the direct responsibility of the individuals involved in making commercial decisions in their
respective businesses or functions. Every member of staff must take responsibility, so the foundation of our approach is to clearly establish our
goal, purpose and values and ensure that all individuals across the organisation deliver in a way consistent with that culture.
Where individuals are confronted by a decision which appears to have wider reputational consequences, they will be supported by a clear set of
rules and processes that provide a clear articulation of the expectations for how people should identify and manage risk consistently, including
how to escalate the issue.
Recognising that Barclays has one global brand, management of reputation risk cannot be ring-fenced and allocated to a single global ‘owner’.
However, where truly difficult decisions with the potential to materially affect the Bank are escalated, they will be dealt with by a committee of
senior executives (Barclays Reputation Council).
In 2012, Barclays experienced a number of reputation-impacting events. Many of these events were the result of prior years’ decisions and
behaviours, and included executive remuneration, the industry-wide investigation into the setting of interbank offered rates such as LIBOR, and
the mis-selling of PPI to consumers and interest rate hedging products to business customers.
We sought to manage the impact of these events to restore trust in Barclays. In addition, as part of our Transform Programme, we have tried to
learn from these events and understand their drivers so that we can better prevent events going forward. Key lessons and areas where we will
continue to make improvements include:
 Visibly principled leadership;
 Values-based assessment and rewards;
 Strong and integrated governance; and
 Broad, active and on-going bilateral stakeholder engagement.
Barclays began to revise its approach to reputation risk comprehensively and holistically in 2012. In order to strengthen the governance relating to
reputation matters, we have recategorised reputation risk as a new Principal Risk and have created a Board Conduct, Reputation and Operational
Risk Committee in 2013. The Barclays Reputation Council created a Bank wide Reputation Risk Control Framework and Reputation Risk Impact/
Control Policy, both of which were approved by the Board. The Council has also delivered training on reputation risk to senior executives across the
bank to ensure the knowledge and culture is embedded.
We will continue to strengthen foundations, enhance governance and improve proactive risk identification/remediation throughout 2013.
All disclosures in this section are unaudited
barclays.com/annualreport188 I Barclays PLC Annual Report 2012
Risk review
Reputation risk