Citibank 2015 Annual Report Download - page 83

65
Second Line of Defense: Independent Control Functions
Citi’s independent control functions, including Risk, Compliance, Human
Resources, Legal and Finance, set standards by which Citi and its businesses
are expected to manage and oversee risks, including compliance with
applicable laws, regulatory requirements, policies and relevant standards of
conduct. Additionally, among other responsibilities, the independent control
functions provide advice and training to Citi’s businesses and establish tools,
methodologies, processes and oversight for controls used by the businesses to
foster a culture of compliance and control.
Risk
The Risk organization is designed to act as an independent partner of
the business to manage market, credit and operational risk in a manner
consistent with Citi’s risk appetite. Risk establishes policies and guidelines for
risk assessments and risk management and contributes to controls and tools
to manage, measure and mitigate risks taken by the firm.
The Chief Risk Officer reports to the Citigroup CEO and the Risk
Management Committee of the Citigroup Board of Directors. The Chief
Risk Officer has regular and unrestricted access to the Risk Management
Committee of the Board and also to the Citigroup Board of Directors to
address risks and issues identified through Risk’s activities.
Compliance
The Compliance organization is designed to protect Citi not only by
managing adherence to applicable laws, regulations, and other standards
of conduct, but also by promoting business behavior that is consistent with
Citi’s mission and value proposition, the principle of responsible finance and
Citi’s compliance risk appetite. For further information on Citi’s compliance
risk appetite, see “Compliance, Conduct and Legal Risk” below.
The Chief Compliance Officer reports to the Citigroup CEO and has
regular and unrestricted access to the Audit Committee, Ethics and Culture
Committee and other ad hoc committees of the Citigroup Board of Directors
to report on, among other items, possible breaches of Citi’s compliance
risk appetite.
Human Resources
The Human Resources organization provides personnel support and
governance in connection with, among other things: recognizing and
rewarding employees who demonstrate Citi’s values and excel in their roles
and responsibilities; setting ethical- and performance-related expectations
and developing and promoting employees who meet those expectations; and
searching for, assessing, and hiring staff who exemplify Citi’s leadership
standards, which outline Citi’s expectations of its employees’ behavior.
The Head of Human Resources reports to the Citigroup CEO and interacts
regularly with the Personnel and Compensation Committee of the Citigroup
Board of Directors.
Legal
The Legal organization is involved in a number of activities designed to
promote the appropriate management of Citi’s exposure to legal risk. Those
activities include, among others: promoting and supporting Citigroup’s
governance processes; advising businesses management, other independent
control functions, the Citigroup Board of Directors and committees of
the Board regarding analysis of laws and regulations, regulatory matters,
disclosure matters, and potential risks and exposures on key litigation and
transactional matters, among other things; advising other independent
control functions in their efforts to ensure compliance with applicable laws
and regulations as well as other internal standards of conduct; serving on
key management committees; reporting and escalating key legal issues to
senior management or other independent control functions; participating
in internal investigations and overseeing regulatory investigations;
and advising businesses on a day-to-day basis on legal, regulatory and
contractual matters.
The General Counsel reports to the Citigroup CEO and is responsible to the
full Citigroup Board. In addition to having regular and unrestricted access to
the full Citigroup Board of Directors, the General Counsel, or his delegates,
regularly attends meetings of the Risk Management Committee, Audit
Committee, Personnel and Compensation Committee, Ethics and Culture
Committee, Operations and Technology Committee, and Nomination,
Governance and Public Affairs Committee as well as other ad hoc committees
of the Citigroup Board of Directors.
Finance
The Finance organization is primarily comprised of the following disciplines:
treasury, controllers, tax and financial planning and analysis. These
disciplines partner with the businesses, providing key data and consultation
to facilitate sound decisions in support of the businesses’ objectives. Through
these activities, Finance serves as an independent control function advising
business management, escalating identified risks and establishing policies or
processes to manage risk.
Through the treasury discipline, Finance has overall responsibility for
managing Citi’s balance sheet and accordingly partners with the businesses
to manage Citi’s liquidity and interest rate risk (price risk for non-trading
portfolios). Treasury works with the businesses to establish balance sheet
targets and limits, as well as sets policies on funding costs charged for
business assets based on their liquidity and duration.
Principally through the controllers discipline, Finance is responsible
for establishing a strong control environment over Citi’s financial
reporting processes consistent with the 2013 Committee of Sponsoring
Organizations of the Treadway Commission, or COSO, Internal
Control—Integrated Framework.
Finance is led by Citi’s Chief Financial Officer (CFO), who reports directly
to the Citigroup CEO. The CFO chairs or co-chairs several management
committees that serve as key governance and oversight forums for business
activities. In addition, the CFO has regular and unrestricted access to the full
Citigroup Board of Directors as well as to the Audit Committee of the Board
of Directors.