HSBC 2010 Annual Report Download - page 200

HSBC HOLDINGS PLC
Report of the Directors: Governance (continued)
Board committees > Group Risk Committee
198
The chairmen of committees of principal
subsidiaries with responsibility for oversight of risk
attended the forum referred to on page 195. One of
the purposes of the forum was to ensure a common
understanding and approach to the way in which
subsidiary committees operate in relation to risk
oversight throughout the Group; to understand and
share the key risk issues we face as an organisation
and the issues faced by members of committees
responsible for oversight of risk; and to discuss the
lessons to be learned from the financial crisis.
Risk governance
All of HSBC’s activities involve, to varying degrees,
the measurement, evaluation, acceptance and
management of risk or combinations of risks. The
Board, advised by the Committee, ensures that the
Group has a strong risk governance culture which
shapes the Group’s risk strategy. The Board and the
Committee ensure that a strong risk management
framework is maintained, via the continuous
monitoring of the risk environment and an integrated
evaluation of risks and their interactions.
The Committee is responsible for overseeing the
Group’s risk governance structure and monitoring
the effectiveness of the Group’s risk management
and internal control systems. The Committee
monitors top and emerging risks and reviews the
outcome of internal and external stress tests.
In carrying out its responsibilities the
Committee is closely supported by the Group Chief
Risk Officer, who ensures that top and emerging
risks are reported to and considered by the
Committee. The Committee receives regular
presentations from the Group Head of Internal Audit
and other business, function and risk heads on risks
within their respective areas of responsibility and
regular reports from the Risk Management Meeting
of the GMB, which is the executive body responsible
for overseeing risk.
The governance structure for the management of
risk at HSBC is set out below. Appropriate
governance arrangements are in place in regional
and operating subsidiaries.
Authority Membership Responsibilities
The Board Executive and non-executive Directors • Approves risk appetite, plans and performance targets for
the Group
• Appoints senior risk officers
• Delegates authorities for risk management
The GRC Independent non-executive Directors • Advises the Board on:
– risk appetite, tolerance and strategy;
– stress testing;
– systems of risk management, internal control and
compliance used to identify, measure, monitor, control
and report risks;
– the alignment of the Board’s risk appetite with strategy
and reward; and
– the maintenance and development of a supportive
culture in relation to the management of risk.
Risk Management Meeting
of the GMB
Group Chief Executive
Group Chief Risk Officer
Group Finance Director
Senior management
• Formulates high-level Group risk policy
• Exercises delegated risk authorities
• Oversees implementation of risk appetite and controls
• Monitors all categories of risk and determines action
Global Risk Management Board Group Chief Risk Officer
Chief Risk Officers of HSBC’s regions
Heads of risk disciplines within Group
Management Office
• Supports the Risk Management Meeting and the Group
Chief Risk Officer in providing strategic direction for the
Global Risk function, sets priorities and oversees their
execution
• Oversees consistent risk approach to accountability and
control across the Global Risk function
Risk appetite
Risk appetite is central to HSBC’s management of
risk. The Board, advised by the GRC, approves the
Group’s risk appetite which describes the types and
levels of risk that the Group is prepared to accept in
executing our strategy. Our risk appetite is
underpinned by the following core characteristics: