Discover 2011 Annual Report Download - page 24

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Risk Committee. Our Risk Committee is a management-level committee, authorized by the Audit and Risk Committee of
our Board of Directors and chaired by our Corporate Risk Officer, that provides a forum for our senior management team to
review and discuss credit, market, liquidity, operational, legal and compliance, and strategic risks across the company and for
each business unit. Risk Committee membership consists of all members of the Executive Committee and the Corporate Risk
Officer. The Committee regularly reports to the Audit and Risk Committee of our Board of Directors on risks and risk
management. Our Risk Committee has formed a number of committees to assist it in carrying out its responsibilities. Each
committee is guided by a charter that defines the mandates of the committee in further detail. These committees, made up of
representatives from senior levels of management, escalate issues to our Risk Committee as necessary. These risk management
committees include the Asset/Liability Management Committee, the Capital Planning Committee, the Counterparty Credit
Committee, the Discover Bank Credit Committee, the Discover Bank Pricing Committee, the Payment Services Steering
Committee, the New Initiatives Committee, the Operational Risk Committee and the Privacy and Policy Committee.
Chief Executive Officer. Our Chief Executive Officer is ultimately responsible for our risk management. In that capacity,
our Chief Executive Officer establishes our risk management culture and ensures the business operates in accordance with our
risk culture. Our Corporate Risk Officer reports to our Chief Executive Officer.
Senior Executive Officers. Our senior executive officers are responsible for ensuring their business units operate within
established risk limits. They are also responsible for identifying risks; explicitly considering risk when developing strategic
plans, budgets and new products; and implementing appropriate risk controls when pursuing business strategies and objectives.
Senior executive officers also coordinate with our corporate risk management department to produce relevant, sufficient,
accurate and timely risk reporting that is consistent with the processes and methodology established by our corporate risk
management department. In addition, our senior executive officers are responsible for ensuring that sufficient financial
resources and qualified personnel are deployed to manage the risks inherent in our business activities.
Corporate Risk Officer. Our Corporate Risk Officer chairs our Risk Committee and manages our corporate risk
management department. Our Corporate Risk Officer is responsible for establishing and implementing standards for the
identification, management and measurement of risk on an enterprise-wide basis, as well as for monitoring and reporting such
risks.
Corporate Risk Management. Our corporate risk management department is led by our Corporate Risk Officer and
supports business units by providing objective oversight of our risk profile and ensuring risks are managed as defined by
policy. Our corporate risk management department also provides risk management tools and policies, and aggregates and
reports our risks to our Board of Directors, the Audit and Risk Committee of our Board of Directors and our Risk Committee.
Law and Compliance Department. Our law and compliance department is responsible for establishing and maintaining a
compliance program that includes compliance risk identification, assessment, policy development, monitoring, testing, training
and reporting activities. Through collaboration with business units, our law and compliance department incorporates a
commitment to compliance in our day-to-day activities. Our Chief Compliance Officer reports to our General Counsel.
Internal Audit Department. Our internal audit department is responsible for performing periodic, independent reviews
and testing of compliance with our risk management policies and standards, performing assessments of the design and
operating effectiveness of these policies and standards, and validating that all risk management controls are functioning as
intended. The head of our internal audit department reports to the Audit and Risk Committee of our Board of Directors.
Risk Appetite and Strategic Limit Structure
Our risk appetite and strategic limit structure establishes the amount of risk, on a broad level, that we are willing to
accept in pursuit of shareholder value. It reflects our risk management philosophy and, in turn, influences our culture and
operating style. Our determination of risk appetite and strategic limits is directly linked to our strategic planning process and is
consistent with our aspirations and mission statement. Risk appetite expressions and strategic limits are categorized by risk
type, cascade through our committees and business units, and are incorporated into business decisions, reporting and day-to-
day business discussions. Our risk appetite expressions and strategic limits also serve as tools to preclude business activities
that are inconsistent with our long-term goals. Our risk appetite and strategic limit structure is approved by our Board of
Directors.
Management and our corporate risk management department monitor approved limits and escalation triggers to ensure
that the business is operating within the expressed risk appetite and strategic limits. Risk limits are monitored and reported on
to various risk committees and our Board of Directors, as appropriate. Through ongoing monitoring of risk exposures,
management is able to identify appropriate risk response and mitigation strategies in order to react dynamically to changing
conditions.
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