Capital One 2007 Annual Report Download - page 26

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products to develop products that appeal to different and changing consumer preferences. Our customized products include products
offered to a wide range of consumer credit risk profiles, as well as products aimed at special consumer interests. Our pricing strategies
are risk-based; lower risk customers may likely be offered products with more favorable pricing and we expect these products to yield
lower delinquencies and credit losses. On products offered to higher risk customers, however, we are likely to experience higher
delinquencies and losses, and we price these products accordingly.
Auto Finance Sub-segment. We purchase retail installment contracts, secured by new and used automobiles or other motor vehicles,
through dealer networks throughout the United States. Additionally, we utilize direct marketing, including the internet, to offer
automobile financing directly to consumers. Our direct marketed products include financing for the purchase of new and used
vehicles, as well as refinancing of existing motor vehicle loans. As of December 31, 2007, we are the third largest non-captive
provider of auto financing in the United States.
Global Financial Services Sub-segment. The Global Financial Services segment consists of international (U.K. and Canada) lending,
small business lending, installment loans, home loans, healthcare finance and other consumer financial service activities, extending
Capital Ones national scale lending franchise and providing geographic diversification. In our international businesses, we utilize
methodologies and approaches similar to those we use in the United States.
Geographic Diversity
Loan portfolio concentration within a specific geographic region may be regarded differently based upon the current and expected
credit characteristics and performance of the portfolio. Our loan portfolio is geographically diverse, although we do have commercial
lending concentrations in the New York metropolitan area and Louisiana. See Item 8 Financial Statements and Supplementary
DataNotes to the Consolidated Financial StatementsNote 26 of this form.
Enterprise Risk Management
Risk is an inherent part of our business and activities. We have an Enterprise Risk Management (ERM) program designed to ensure
appropriate and comprehensive oversight and management of risk. The ERM program has three components. First, the Board of
Directors and senior management committees oversee risk and risk management practices. Second, the centralized department headed
by the Chief Risk Officer establishes risk management methodologies, processes and standards. Third, the individual business areas
throughout the Company are responsible for managing risk in their businesses and performing ongoing identification, assessment and
response to risks. Our ERM framework includes eight categories of risk: credit, liquidity, market, operational, legal, strategic,
reputation, and compliance.
Board and Senior Management Oversight
A combination of the Board and senior management committees is used to oversee the management of risk. The Audit and Risk
Committee of the Board of Directors oversees our accounting, financial reporting, internal controls and risk assessment and
management processes. The Audit and Risk Committee also reviews periodic reporting on significant risks and mitigation activities
and compliance with corporate risk policies. The Board Finance and Trust Oversight Committee oversees our management of
liquidity, capital and financial risks.
The Executive Committee, a committee of senior management chaired by the Chief Executive Officer, provides guidance to senior
executives regarding strategic risk and provides an integrated view of risk through reports by our other senior management
committees:
 Risk Management Committeeis chaired by the Chief Risk Officer and provides a forum for senior executives to have a
regular, integrated discussion of risk management. The Risk Management Committee focuses on Compliance,
Operational, Reputational, Legal and Strategic risks.
 Credit Policy Committeeensures the appropriateness of our credit policies and procedures, counsels the Chief Risk
Officer and the Chief Credit Officers regarding fulfillment of their duties, and provides a forum for the discussion of
credit matters.
 Asset and Liability Management Committeeprovides advice and counsel to the Chief Financial Officer and other
executives on the acquisition and deployment of funds, the liquidity position of the Company and our subsidiaries capital
management, off-balance sheet activities, activities related to the management of interest rate risk, and investment
activities.
Integrity, Ethical Values and Risk Management Culture
We maintain our risk management culture through various mechanisms designed to bring the consideration of risk into daily decision
making. We have a corporate Code of Business Conduct and Ethics, available on the Corporate Governance page of our website at
www.capitalone.com/about, under which each associate is obligated to behave with integrity in dealing with customers and business