JP Morgan Chase 2014 Annual Report Download - page 146

Management’s discussion and analysis
144 JPMorgan Chase & Co./2014 Annual Report
LEGAL RISK MANAGEMENT
Legal risk is the risk of loss or imposition of damages, fines,
penalties or other liability arising from failure to comply
with a contractual obligation or to comply with laws or
regulations to which the Firm is subject.
Overview
In addition to providing legal services and advice to the
Firm, and communicating and helping the lines business
adjust to the legal and regulatory changes they face,
including the heightened scrutiny and expectations of the
Firm’s regulators, the global Legal function is responsible
for working with the businesses and corporate functions to
fully understand and assess their adherence to laws and
regulations, as well as potential exposures on key litigation
and transactional matters. In particular, Legal assists
Oversight & Control, Risk, Finance, Compliance and Internal
Audit in their efforts to ensure compliance with all
applicable laws and regulations and the Firm’s corporate
standards for doing business. The Firm’s lawyers also advise
the Firm on potential legal exposures on key litigation and
transactional matters, and perform a significant defense
and advocacy role by defending the Firm against claims and
potential claims and, when needed, pursuing claims against
others.
Governance and Oversight
The Firm’s General Counsel reports to the CEO and is a
member of the Operating Committee, the Firmwide Risk
Committee and the Firmwide Control Committee. The
General Counsel’s leadership team includes a General
Counsel for each line of business, the heads of the Litigation
and Corporate & Regulatory practices, as well as the Firm’s
Corporate Secretary. Each region (e.g., Latin America, Asia
Pacific) has a General Counsel who is responsible for
managing legal risk across all lines of business and
functions in the region.
Legal works with various committees (including new
business initiative and reputation risk committees) and the
Firm’s businesses to protect the Firm’s reputation beyond
any particular legal requirements. In addition, the Firm’s
Conflicts Office examines the Firm’s wholesale transactions
that may have the potential to create conflicts of interest
for the Firm.
COMPLIANCE RISK MANAGEMENT
Compliance risk is the risk fines or sanctions or of financial
damage or loss due to the failure to comply with laws, rules,
and regulations.
Overview
Global Compliance Risk Management’s (“Compliance”) role
is to identify, measure, monitor, and report on and provide
oversight regarding compliance risks arising from business
operations, and provide guidance on how the Firm can
mitigate these risks.
While each line of business is accountable for managing its
compliance risk, the Firm’s Compliance teams work closely
with the Operating Committee and senior management to
provide independent review and oversight of the lines of
business operations, with a focus on compliance with
applicable global, regional and local laws and regulations.
In recent years, the Firm has experienced heightened
scrutiny by its regulators of its compliance with regulations,
and with respect to its controls and operational processes.
The Firm expects such regulatory scrutiny will continue.
Governance and Oversight
Compliance operates independent of the lines of business,
and is led by the Chief Compliance Officer (“CCO”) who
reports directly to the Firm’s COO. The Firm maintains
oversight and coordination in its Compliance Risk
Management practices globally through ongoing dialog and
reporting between the lines of business, Regional Chief
Compliance Officers and the CCO regarding significant
compliance and regulatory management matters, as well as
implementation of the Compliance program across the lines
of business and Regions.
The Firm has in place a Code of Conduct (the “Code”), and
each employee is given annual training in respect of the
Code and is required annually to affirm his or her
compliance with the Code. The Code sets forth the Firm’s
core principles and fundamental values, including that no
employee should ever sacrifice integrity - or give the
impression that he or she has - even if one thinks it would
help the Firm’s business. The Code requires prompt
reporting of any known or suspected violation of the Code,
any internal Firm policy, or any law or regulation applicable
to the Firm’s business. It also requires the reporting of any
illegal conduct, or conduct that violates the underlying
principles of the Code, by any of the Firm’s customers,
suppliers, contract workers, business partners, or agents.
Specified employees are specially trained and designated as
“code specialists” who act as a resource to employees on
Code of Conduct matters. In addition, concerns may be
reported anonymously and the Firm prohibits retaliation
against employees for the good faith reporting of any actual
or suspected violations of the Code.