JP Morgan Chase 2014 Annual Report Download - page 107

JPMorgan Chase & Co./2014 Annual Report 105
ENTERPRISE-WIDE RISK MANAGEMENT
Risk is an inherent part of JPMorgan Chase’s business
activities. When the Firm extends a consumer or wholesale
loan, advises customers on their investment decisions,
makes markets in securities, or conducts any number of
other services or activities, the Firm takes on some degree
of risk. The Firm’s overall objective in managing risk is to
protect the safety and soundness of the Firm, avoid
excessive risk taking, and manage and balance risk in a
manner that serves the interest of our clients, customers
and shareholders.
The Firm’s approach to risk management covers a broad
spectrum of risk areas, such as credit, market, liquidity,
model, structural interest rate, principal, country,
operational, fiduciary and reputation risk.
The Firm believes that effective risk management requires:
• Acceptance of responsibility, including identification and
escalation of risk issues, by all individuals within the
Firm;
• Ownership of risk management within each line of
business and corporate functions; and
• Firmwide structures for risk governance.
Firmwide Risk Management is overseen and managed on an
enterprise-wide basis. The Firm’s Chief Executive Officer
(“CEO”), Chief Financial Officer (“CFO”), Chief Risk Officer
(“CRO”) and Chief Operating Officer (“COO”) develop and
set the risk management framework and governance
structure for the Firm, which is intended to provide
comprehensive controls and ongoing management of the
major risks inherent in the Firm’s business activities. The
Firm’s risk management framework is intended to create a
culture of transparency, awareness and personal
responsibility through reporting, collaboration, discussion,
escalation and sharing of information. The CEO, CFO, CRO
and COO are ultimately responsible and accountable to the
Firm’s Board of Directors.
The Firm’s risk culture strives for continual improvement
through ongoing employee training and development, as
well as talent retention. The Firm also approaches its
incentive compensation arrangements through an
integrated risk, compensation and financial management
framework to encourage a culture of risk awareness and
personal accountability.