ING Direct 2004 Annual Report Download - page 156

154 ING Group Annual Report 2004
INTRODUCTION
Group risk function During 2004 the Executive Board streamlined the governance of risk management at the ING Group level.
The leading principle is that it should be clear who holds responsibility for risk decisions. As a result, the Executive Board has
been given more direct involvement in, and accountability for, the risk management decision-making process, and the number
of risk committees in the Group Risk Function has been substantially reduced.
The Executive Board determines the risk appetite of ING Group, aiming for a balance between risk, return and capital and sets
risk policy and limits. The Chief Financial Officer (CFO) bears primary overall responsibility for the Group Risk Function. A Dual
Signatory Approval structure is being introduced through which Executive Board members and the Corporate Risk Managers
will take direct responsibility for specified matters (such as transactional approval) within the delegated authorities granted
by the Executive Board.
The Group Risk Function is structured independently from the business lines and is organised through three departments:
– Corporate Credit Risk Management (CCRM) is responsible for the credit risk management of ING Bank and ING Insurance;
– Corporate Market Risk Management (CMRM) is responsible for the market risk management of ING Bank and also for the
operational risk management of ING Bank and ING Insurance;
– Corporate Insurance Risk Management (CIRM) is responsible for the insurance and market risk management of ING Insurance.
The heads of these departments (Corporate Risk Managers) report to the CFO and bear direct responsibility for risk (mitigating)
decisions. The Corporate Risk Managers advise the CFO and are responsible for the harmonisation and standardisation of risk-
management practices. They are also responsible for risk definitions, policies, procedures, models and methodologies,
measurement, monitoring and consolidated reporting.
The regional and local risk managers in the business lines have a functional reporting line to the Corporate Risk Managers;
they ensure day-to-day risk analysis, proper measurement and controls, registration of risks and policy development within
the overall risk governance framework.
Group risk committees The risk committees mentioned below act within the overall risk policy and delegated authorities granted
by the Executive Board. The risk committees have an advisory role to the CFO and ensure a close link between the business lines
and the Group risk management function through representation of the business heads and the Corporate Risk Managers on
each committee.
Central Credit Committee ING Bank (CKC)
CKC is the highest credit approval body for ING Bank. It advises on country limits, country ratings, credit limits and counterparty
limits. The CKC meets twice weekly.
ING Bank Provisioning Committee (IPC)
IPC advises on ING Bank’s specific debtor- and country- provisioning levels based on formal analyses of the credit portfolio,
which take place on a quarterly basis. The IPC meets on a quarterly basis.
Asset & Liability Committee ING Bank (ALCO Bank)
ALCO Bank advises on the overall risk profile of all ING Bank’s non-trading market risk that occurs in its Wholesale Banking,
Retail Banking and ING Direct activities. ALCO Bank defines the policy regarding funding, liquidity, interest rate mismatch and
solvency of ING Bank. ALCO Bank meets on a monthly basis.
Asset & Liability Committee ING Insurance (ALCO Insurance)
ALCO Insurance advises on all risks for ING Insurance activities. This includes volatility (affecting earnings and value), exposure
(required capital and market risk) and insurance risks. ALCO Insurance meets six times a year.
The following committees at the ING Group level were disbanded during 2004 in order to streamline risk management
governance at the Group level: the Risk Policy Committee, the Asset & Liability Committee ING Group, the RAROC Directors
Committee, the Market Risk Committee ING Bank and the Operational Risk Committee ING Group.
RISK MANAGEMENT
amounts in millions of euros, unless stated otherwise and all accounting based sensitivity
measures are stated on an ING GAAP basis
2.3
ADDITIONAL FINANCIAL
INFORMATION