HSBC 2015 Annual Report Download - page 104

Report of the Directors: Risk (continued)
Managing risk
HSBC HOLDINGS PLC
102
Governance and structure
Corporate and risk governance
Robust risk governance and accountability are embedded
throughout the Group through an established framework
that ensures appropriate oversight of and accountability
for the effective management of risk.
The Board has ultimate responsibility for the effective
management of risk and approves HSBC’s risk appetite.
The Board is advised on risk-related matters by the
following committees:
• The Group Risk Committee advises the Board on
risk appetite and its alignment with strategy, risk
governance and internal controls, and high-level risk
related matters.
• The Financial System Vulnerabilities Committee reports
to the Board on matters relating to financial crime and
financial system abuse and provides a forward-looking
perspective on financial crime risk.
• The Conduct & Values Committee oversees the design
and application of HSBC’s policies, procedures and
standards to ensure that we conduct business responsibly
and consistently adhere to HSBC Values, and advises the
Board accordingly.
Executive accountability for the ongoing monitoring,
assessment and management of the risk environment and
the effectiveness of our risk management policies resides
with the RMM, the Risk Management Meeting of the
Group Management Board (‘GMB’). Day-to-day risk
management activities are the responsibility of senior
managers of individual businesses, supported by global
functions as described under ‘Three lines of defence’
below.
The consistency of governance structures across HSBC is
enforced through risk management committees, as set
out in our enterprise risk management framework, and
adherence to consistent standards and risk management
policies.
The executive and non-executive risk governance
structures and their interactions are set out on page 193,
with similar arrangements in place for major operating
subsidiaries.
The report of the Group Risk Committee is on page 266, of the
Financial System Vulnerabilities Committee is on page 268, and
of the Conduct & Values Committee is on page 272.
Risk appetite
The Group’s Risk Appetite Statement (‘RAS’) is the written
articulation of the aggregated level and types of risk that
we are willing to accept in our business activities in order
HSBC Culture and Values
The Board approves risk appetite, plans and performance targets
(page 256), which sets the ‘tone from the top’.
GRC advises on risk appetite, risk governance and other high-level
risk-related matters (page 266).
FSVC advises on financial crime and financial systems abuse (page 268).
CVC advises on polices and procedures to ensure we adhere to HSBC
Values (page 272).
Role of Board and its Committees
Formulate and implement strategy within risk appetite.
Responsible for risk governance and controls
Role of senior management
Risks arising from our business activities that are measured,
monitored and managed (page 105).
Risk Policies and Practices
Our ‘Three lines of defence’ model defines roles and responsibilities
for risk management (page 104).
Our risk culture empowers our people to do the right thing for our
customers, reinforced by our approach to remuneration (page 104).
An independent Risk function ensures the necessary balance in
risk/return decisions (page 104).
Risk governance framework
People
Three lines of defence
model
Independent Risk
function
Describes the types and quantum of risks we are prepared to accept in
achieving our medium- and long-term strategic goals (page 102).
Risk appetite
Processes to identify, monitor and mitigate risks to ensure we remain
within our risk appetite (page 103).
Risk map Top and emerging risks Stress testing
Banking and insurance risks
Group Risk
Committee
(‘GRC’)
Financial System
Vulnerabilities Committee
(‘FSVC’)
Conduct & Values
Committee
(‘CVC’)
Governance and StructureProcesses
Tools, Technology and Infrastructure
Ensures appropriate oversight of and accountability for management of
risk (page 102).
Enterprise-wide risk management tools
Responsibilities
Identification
and Assessment Monitoring Mitigation/
Management Reporting
Internal Controls
Set by Risk Stewards for each of our material banking and insurance
risks (page 105).
The Operational Risk Management Framework defines minimum standards
and processes for operational risks and internal controls across the Group
(page 176).
Essential for the effective management of risk.