Goldman Sachs 2013 Annual Report Download - page 81

Management’s Discussion and Analysis
We also focus on the rigor and effectiveness of the firm’s
risk systems. The goal of our risk management technology
is to get the right information to the right people at the right
time, which requires systems that are comprehensive,
reliable and timely. We devote significant time and
resources to our risk management technology to ensure that
it consistently provides us with complete, accurate and
timely information.
People. Even the best technology serves only as a tool for
helping to make informed decisions in real time about the
risks we are taking. Ultimately, effective risk management
requires our people to interpret our risk data on an ongoing
and timely basis and adjust risk positions accordingly. In
both our revenue-producing units and our independent
control and support functions, the experience of our
professionals, and their understanding of the nuances and
limitations of each risk measure, guide the firm in assessing
exposures and maintaining them within prudent levels.
We reinforce a culture of effective risk management in our
training and development programs as well as the way we
evaluate performance, and recognize and reward our
people. Our training and development programs, including
certain sessions led by the most senior leaders of the firm,
are focused on the importance of risk management, client
relationships and reputational excellence. As part of our
annual performance review process, we assess reputational
excellence including how an employee exercises good risk
management and reputational judgment, and adheres to
our code of conduct and compliance policies. Our review
and reward processes are designed to communicate and
reinforce to our professionals the link between behavior
and how people are recognized, the need to focus on our
clients and our reputation, and the need to always act in
accordance with the highest standards of the firm.
Structure
Ultimate oversight of risk is the responsibility of the firm’s
Board. The Board oversees risk both directly and through
its committees, including its Risk Committee. The Risk
Committee consists of all of our independent directors.
Within the firm, a series of committees with specific risk
management mandates have oversight or decision-making
responsibilities for risk management activities. Committee
membership generally consists of senior managers from
both our revenue-producing units and our independent
control and support functions. We have established
procedures for these committees to ensure that appropriate
information barriers are in place. Our primary risk
committees, most of which also have additional sub-
committees or working groups, are described below. In
addition to these committees, we have other risk-oriented
committees which provide oversight for different
businesses, activities, products, regions and legal entities.
All of our firmwide, regional and divisional committees
have responsibility for considering the impact of
transactions and activities which they oversee on
our reputation.
Membership of the firm’s risk committees is reviewed
regularly and updated to reflect changes in the
responsibilities of the committee members. Accordingly, the
length of time that members serve on the respective
committees varies as determined by the committee chairs
and based on the responsibilities of the members within
the firm.
In addition, independent control and support functions,
which report to the chief financial officer, the general
counsel and the chief administrative officer, are responsible
for day-to-day oversight or monitoring of risk, as discussed
in greater detail in the following sections. Internal Audit,
which reports to the Audit Committee of the Board and
includes professionals with a broad range of audit and
industry experience, including risk management expertise,
is responsible for independently assessing and validating
key controls within the risk management framework.
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