HSBC 2014 Annual Report Download - page 100

HSBC BANK PLC
Report of the Directors: Corporate Governance (continued)
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responsible financial officer and analytical review
procedures at reporting entity and group levels.
• Responsibility for risk management: Management of
global businesses and global functions are primarily
accountable for managing, measuring and monitoring
their risks and controls. Processes consistent with the
three lines of defence risk management and internal
control model are in place to ensure weaknesses are
escalated to senior management and addressed.
• IT operations: Centralised functional control is
exercised over all IT developments and operations.
Common systems are employed for similar business
processes wherever practicable.
• Functional management: Global functional
management is responsible for setting policies,
procedures and standards for the following risks:
credit, market, liquidity, capital, financial
management, model, reputational, pension, strategic,
sustainability and operational risk (including
accounting, tax, legal, regulatory compliance, financial
crime compliance, fiduciary, information security,
security and fraud, systems and people risk).
Authorities to enter into credit and market risk
exposures are delegated with limits to line
management of group companies. The concurrence
of the appropriate global function is required for
credit proposals with specified higher risk
characteristics. Credit and market risks are measured
and reported on in subsidiaries and aggregated for
review of risk concentrations on a Group-wide basis.
• Internal Audit: The establishment and maintenance
of appropriate systems of risk management and
internal control is primarily the responsibility of
business management. The Global Internal Audit
function, which is centrally controlled, provides
independent and objective assurance in respect of
the adequacy of the design and operating
effectiveness of the group’s framework of risk
management, control and governance processes
across the group, focussing on the areas of greatest
risk to HSBC using a risk-based approach.
• Internal Audit recommendations: Executive
management is responsible for ensuring that
recommendations made by the Global Internal Audit
function are implemented within an appropriate and
agreed timetable. Confirmation to this effect must be
provided to Global Internal Audit.
• Reputational risk: Policies to guide the bank,
subsidiary companies and management at all levels in
the conduct of business to safeguard the Group’s
reputation are established by the Board of HSBC
Holdings, subsidiary company boards and
committees, board committees and senior
management. Reputational risks can arise from a
variety of causes including environmental, social and
governance issues, as a consequence of operational
risk events and as a result of employees acting in a
manner inconsistent with the HSBC Values. HSBC’s
reputation depends upon the way in which it
conducts its business and may be affected by the way
in which clients, to which it provides financial
services, conduct their business or use financial
products and services.
• During the year, the Risk Committee and the Audit
Committee have kept under review the effectiveness
of this system of internal control and have reported
regularly to the Board. In carrying out their reviews,
the Audit Committee and Risk Committee receive
regular business and operational risk assessments;
regular reports from the heads of key risk functions,
which cover all internal controls, both financial and
non-financial; internal audit reports; external audit
reports; prudential reviews; and regulatory reports.
• The Risk Committee monitors the status of top and
emerging risks and considers whether the mitigating
actions put in place are appropriate. In addition, when
unexpected losses have arisen or when incidents have
occurred which indicate gaps in the control
framework or in adherence to Group policies, the Risk
Committee and the Audit Committee review special
reports, prepared at the instigation of management,
which analyse the cause of the issue, the lessons
learned and the actions proposed by management to
address the issue.
Health and safety
The maintenance of appropriate health and safety
standards remains a key responsibility of all managers
and the bank is committed to proactively managing all
health and safety risks associated with its business. The
bank’s objectives are to identify, remove and mitigate
material risks relating to fires and accidents or injuries to
employees, customers and visitors.
Group policies, standards and guidance for the
management of health and safety are set by Global
Corporate Real Estate. Achieving these in each country in
which the Group operates is the responsibility of the
Chief Operating Officer of that country with support and
coordination provided by the Health and Safety
Coordinator.
In terms of physical and geopolitical risk, Global Security
and Fraud Risk provide regular Security Risk Assessments
to assist management in judging the level of terrorist and
violent criminal threat. Regional Security and Fraud Risk
functions conduct regular security reviews of all Group
buildings to ensure measures to protect staff, buildings,
assets and information are appropriate to the level of
threat.
HSBC remains committed to maintaining its
preparedness and to ensuring the highest standards of
health and safety wherever in the world the Group
operates.
Diversity and inclusion
HSBC is building a values-led high performance culture
where all employees are valued, respected and where
their opinions count. Our culture will be strengthened by
employing the best people and optimising their ideas,
abilities and differences.
We remain committed to meritocracy, which requires a
diverse and inclusive culture where employees’ views are
heard, their concerns are attended to and they work in
an environment where bias, discrimination and