Barclays 2012 Annual Report Download - page 191

The strategic report Governance Risk review Financial review Financial statements Risk management Shareholder information
Conduct risk
Conduct risk is the risk that detriment is caused to the Bank, our customers, clients or counterparties because
of the inappropriate execution of our business activities.
During 2012 there were a number of conduct risk issues affecting the group, as set out under legal risk and regulatory risk in the risk factors
section on pages 112-113.
In response, during 2013 we have specifically recategorised conduct risk as a Principal Risk which will be under the supervision of Sir Hector Sants,
Head of Compliance and Government and Regulatory Relations. In order to strengthen the governance relating to conduct matters we have
created a Board Conduct, Reputation and Operational Risk Committee. The Committee meets quarterly under the auspices of the Chairman
of the Group. We will also establish a management committee to focus on conduct risk.
In addition the restructuring of the FSA has led to a focus on conduct risk. This is intended to go beyond the previous focus on compliance with
rules, on process and on treating customers fairly, to embrace a holistic approach of how a firm organises itself and does business in order to
ensure good customer outcomes.
The FSA and, from 1 April 2013 the Financial Conduct Authority (FCA), expects regulated firms to be able to focus holistically on conduct risk
and to report internally to management and to regulators on conduct risk which the FCA will assess through the Firm Systematic Framework.
This necessitates a new approach and Barclays has proactively initiated a number of initiatives in order to ensure that it both meets business
needs and the expectations of regulators and other stakeholders.
We will continue developing our definition and standard of conduct risk and building out and embedding a new framework for conduct risk
management and have established a group wide programme to deliver this outcome. The programme has Executive Committee sponsorship
from the Head of Compliance and Regulatory and Government Relations. The components of the programme include:
 Design and rollout: design and embedding of a new conduct risk Principal Risk in accordance with the group principal risks policy;
 Strategy and management information: assessing how best to feed conduct risk appetite into strategic decision-making and developing
management information to support decision-making and facilitate the monitoring of the conduct risk profile against appetite; and
 Conduct risk assessment: assessing the current state of controls within each business to capture what we do well and identify where we
must improve.
The programme will look to build on and enhance the work already done in this area, for example the focus on treating customers fairly and
complaints handling. It will also take account of emerging regulatory developments following the legal creation of the FCA.
All disclosures in this section are unaudited
barclays.com/annualreport Barclays PLC Annual Report 2012 I 189
Risk review
Conduct risk