JP Morgan Chase 2009 Annual Report Download - page 136

Management’s discussion and analysis
JPMorgan Chase & Co./2009 Annual Report
134
REPUTATION AND FIDUCIARY RISK MANAGEMENT
A firm’s success depends not only on its prudent management of
the liquidity, credit, market and operational risks that are part of its
business risks, but equally on the maintenance among many con-
stituents – clients, investors, regulators, as well as the general
public – of a reputation for business practices of the highest qual-
ity. Attention to reputation always has been a key aspect of the
Firm’s practices, and maintenance of the Firm’s reputation is the
responsibility of everyone at the Firm. JPMorgan Chase bolsters this
individual responsibility in many ways, including through the Firm’s
Code of Conduct, training, maintaining adherence to policies and
procedures, and oversight functions that approve transactions.
These oversight functions include line-of-businesses risk commit-
tees, a Conflicts Office, which examines wholesale transactions
with the potential to create conflicts of interest for the Firm; and a
Reputation Risk Office and regional Reputation Risk Committees,
which review certain transactions that have the potential to affect
adversely the Firm’s reputation. These regional committees, whose
members are senior representatives of businesses and control
functions in the region, focus among other things on complex
derivatives and structured finance transactions with clients with the
goal that these transactions not be used to mislead the client’s
investors or others.
Fiduciary risk management
The risk management committees within each line of business
include in their mandate oversight of the legal, reputational and,
where appropriate, fiduciary risks in their businesses that may
produce significant losses or reputational damage. The Fiduciary
Risk Management function works with the relevant line-of-business
risk committees, with the goal of ensuring that businesses provid-
ing investment or risk management products or services that give
rise to fiduciary duties to clients perform at the appropriate stan-
dard relative to their fiduciary relationship with a client. Of particu-
lar focus are the policies and practices that address a business’
responsibilities to a client, including client suitability determination;
disclosure obligations and communications; and performance
expectations with respect to risk management products or services
being provided. In this way, the relevant line-of-business risk com-
mittees, together with the Fiduciary Risk Management function,
provide oversight of the Firm’s efforts to monitor, measure and
control the risks that may arise in the delivery of products or ser-
vices to clients that give rise to such fiduciary duties, as well as
those stemming from any of the Firm’s fiduciary responsibilities to
employees under the Firm’s various employee benefit plans.