HSBC 2015 Annual Report Download - page 270

Report of the Directors: Corporate Governance (continued)
Board committees
HSBC HOLDINGS PLC
268
Geopolitical risk The GRC received regular reports on geopolitical risks including the crises in the Middle East, slowdown in
mainland China and redenomination risk of Greece exiting the eurozone. Management provided regular updates
on the implementation of mitigating actions in response to these matters which included the augmentation of
anti-money laundering, sanctions and financial crime compliance controls. The GRC also held a joint meeting
with the GAC which focused on areas of mutual interests including entity level controls, operational risk and
subsidiary governance.
Further information on the identification, management and mitigation of our material risks types, and on our top and emerging risk is provided
on pages 105 and 110, respectively.
Financial System Vulnerabilities Committee
I am pleased to present the 2015 report of the Financial System
Vulnerabilities Committee (‘FSVC’). The FSVC oversees the
implementation by management of policies aimed at mitigating
financial crime and system abuse risks which HSBC faces in the
execution of its strategy. In doing so, it provides thought
leadership, governance, oversight and policy guidance over the
framework of controls and procedures which has been designed
to address these risks to which HSBC and the financial system
more broadly, may be exposed.
In 2015, the FSVC continued to focus on the controls and
procedures which underpin Global Standards and mitigate our
financial crime risks. The interactions with the Monitor1 have
been a key part of the FSVC’s agenda as the Committee
continues to oversee the compliance-related initiatives being
implemented by the Group to address its obligations under its
Deferred Prosecution Agreement (‘US DPA’), and the Monitor
and his team have attended a number of FSVC meetings during
the course of the year. These meetings have also included
private meetings with the non-executive members of the FSVC.
Other areas of focus have included oversight of HSBC’s cyber
security framework and monitoring significant developments in
the information security environment and the sanctions control
framework in the light of heightened geopolitical risk. During
2015, the FSVC has taken a more holistic approach to identifying
potential financial crime compliance (‘FCC’) issues. The heads of
business units and country heads have routinely been invited to
meetings to provide insights on the implementation of Global
Standards and key FCC issues for their areas.
In 2016, the FSVC will continue to focus on Global Standards
and Financial Crime Compliance (FCC) through the monitoring
and tracking of the FCC plan and engaging with the Monitor
to ensure his recommendations are acted on. The Committee
will continue its programme of reporting by country heads on
FCC. The FSVC will also retain its focus on FCC controls in the
Private Bank.
Cyber security will remain a key area of focus for the Committee.
During the course of the year we welcomed Nehchal Sandhu as
an additional adviser member to the Committee. Nehchal brings
extensive experience in leading the national cyber security
strategy and architecture in India and advising senior
government officials on national security matters. I should like to
thank Sir Simon Robertson, who resigned from the Committee at
the conclusion of the 2015 Annual General Meeting, and Rona
Fairhead, who steps down as a member of the Committee at the
conclusion of the 2016 Annual General Meeting, for their
contributions to the work of the Committee.
Lord Evans of Weardale Chairman
Financial System Vulnerabilities Committee
22 February 2016
1 See page 116 for further details on the Monitor.
Members
Lord Evans of Weardale (Chairman)
Kathleen Casey
Rona Fairhead
Nick Fishwick, CMG1
Dave Hartnett, CB1
William Hughes, CBE QPM1
Nehchal Sandhu1
Leonard Schrank1
The Honourable Juan Zarate1
1 Adviser members
Six adviser members have been appointed to the
Committee to support its work and between them have
extensive experience in geopolitical risk, financial crime
risk, international security, cyber security and law
enforcement matters.
Role and responsibilities
The role and responsibilities of the FSVC are set out in its
terms of reference. The terms of reference can be found
on our website at www.hsbc.com/about-hsbc/corporate-
governance/board-committees.
The key areas of responsibility for the FSVC include:
• governance, oversight and policy guidance over the
framework of controls and procedures designed to
identify areas where HSBC and the financial system
more broadly may become exposed to financial crime
or system abuse;
• oversight of matters relating to anti-money laundering,
sanctions, terrorist financing and proliferation financing,
including the establishment, implementation,
maintenance and review of adequate policies and
procedures sufficient to ensure the continuing
obligations to regulatory and law enforcement agencies
are met and oversight of implementation of the actions
necessary to build assurance in these areas;
• provision of advice as applicable on the implementation
of the Global Standards programme;
• oversight of matters relating to HSBC’s information
security environment and cyber security framework;
and
• providing a forward-looking perspective to the Board on
financial crime risk.
In 2016, the FSVC will assume responsibility for oversight of
controls relating to anti-bribery and corruption.
During 2015, the FSVC held seven meetings. Attendance is
set out in the table on page 258.