ING Direct 2011 Annual Report Download - page 219

Risk management continued
ING Bank
ING BANK
To ensure measured risk-taking throughout the organisation, ING Bank operates through a comprehensive risk management framework.
This ensures the identification, measurement and control of risks at all levels of the organisation so that ING Bank’s financial strength
is safeguarded.
ING Bank uses risk assessment and measurement to guide decision making. As a result, the quality of risk models is important.
The governance process for approval of risk models, methods and parameters ensures compliance with business and regulatory
requirements, via a clear assignment of responsibility and accountability.
Nevertheless, users of the information in the risk management section should bear in mind that the analyses provided are forward looking
measures that rely on assumptions and estimates of future events, some of which are considered extreme and therefore unlikely to occur.
In the normal course of business ING Bank continues to develop, recalibrate and refine the various models that support risk metrics, which
may result in changes to the risk metrics as disclosed.
MISSION AND OBJECTIVES
The mission of ING Bank’s risk management function is to build a sustainable competitive advantage by fully integrating risk management
into daily business activities and strategic planning. This mission is fully embedded in ING Bank’s business processes. The following
principles support this objective:
• Products and portfolios are structured, underwritten, priced, approved and managed appropriately and compliance with internal
and external rules and guidelines is monitored;
• ING Bank’s risk profile is transparent, managed to avoid surprises, and is consistent with delegated authorities;
• Delegated authorities are consistent with the overall Bank strategy and risk appetite; and
• Transparent communication to internal and external stakeholders on risk management and value creation.
Risk Management benefits ING Bank and its shareholders directly by providing more efficient capitalisation and lower costs of risk and
funding. The cost of capital is reduced by working closely with rating agencies and regulators to align capital requirements to risks. Risk
Management helps business units to lower funding costs, make use of the latest risk management tools and skills, and lower strategic risk,
allowing them to focus on their core expertise with the goal of making ING Bank’s businesses more competitive in their markets.
ING BANK RISK GOVERNANCE
ING Bank’s risk management framework is based on the ‘three lines of defence’ concept which ensures that risk is managed in line with
the risk appetite as defined by the Management Board Bank (and ratified by the Supervisory Board) and is cascaded throughout ING Bank.
Business line management and the regional and local managers have primary responsibility for the day-to-day management of risk
and form the first line of defence.
The risk management function, both at bank and regional/local level, belongs to the second line of defence and has the primary
responsibility to align risk taking with strategic planning e.g. in limit setting.
The internal audit function provides an ongoing independent (i.e. outside of the risk organisation) and objective assessment of
the effectiveness of internal controls, including financial and operational risk management and forms the third line of defence.
1 Who we are 2 Report of the Executive Board 3 Corporate governance 4 Consolidated annual accounts 5 Parent company annual accounts 6 Other information 7 Additional information
217ING Group Annual Report 2011