SunTrust 2013 Annual Report Download - page 92

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If we were to assume a one percent decrease in healthcare cost trend rates, the effect would be a decline of less than $1 million
on both the other postretirement benefit obligation and total interest and service cost at December 31, 2013.
To estimate the projected Postretirement Healthcare Benefit obligation as of December 31, 2013, we projected forward the
benefit obligations from January 1, 2013 to December 31, 2013, adjusting for benefit payments, expected growth in the benefit
obligations, changes in key assumptions and plan provisions, and any significant changes in the plan demographics that
occurred during the year, including (where appropriate) subsidized early retirements, changes in per capita claims cost,
Medicare Part D subsidy, and retiree contributions.
During the fourth quarter of 2013, we communicated a change in our retiree medical plan. Effective April 1, 2014, retirees
age 65 and older will enroll in individual health plans that work with Medicare and will no longer participate in a SunTrust-
sponsored group health plan. In addition, we will fund a tax-advantaged Health Reimbursement Arrangement (HRA) to assist
some retirees with medical expenses.
ENTERPRISE RISK MANAGEMENT
In the normal course of business, we are exposed to various risks. We have established an enterprise risk governance framework
to manage these risks and support key business objectives. Underlying this framework are limits, policies, metrics, processes,
and procedures designed to effectively identify, monitor, and manage risk.
The Board is responsible for oversight of enterprise risk governance. The BRC assists the Board in executing this responsibility.
Administration of the framework and governance process is the responsibility of the CRO, who executes this responsibility
through the CRM organization. The CRO reports to the CEO, and provides overall vision, direction, and leadership regarding
our enterprise risk management framework. Additionally, the CRO provides regular risk assessments to Executive
Management, the BRC, other Board committees (as appropriate) and the full Board, and provides other information to
Executive Management and the Board, as requested.
Our risk governance structure and processes are founded upon a three line of defense framework, each of which is critical to
ensuring that risk and reward in all activities are properly identified, assessed, and managed. The three line of defense framework
requires effective teamwork combined with individual accountability within defined roles. The first line of defense is comprised
of all teammates within our business segments, as well as those within certain functional units undertaking execution activities.
The first line of defense owns and is accountable for business strategy, performance, management, and controls within their
respective units and for the identification, management, and reporting of existing and emerging risks. The second line of
defense is comprised of certain functions, including CRM; these units are responsible for independent governance and oversight
of the first line of defense relative to specific risks. Responsibilities include developing appropriate risk management
frameworks/programs that facilitate first line of defense identification, reporting, assessment, control, mitigation, and
communication of the risks. It also monitors first line of defense execution of these responsibilities. Second line of defense
frameworks/programs conform to applicable laws, rules, regulations, regulatory guidance, decrees and orders, and stated
corporate business objectives and risk appetite, tolerances and limits. The third line of defense is comprised of our assurance
functions, i.e., Audit Services and Risk Review, which independently test, verify, and evaluate management controls and
provide risk-based advice and counsel to management to help develop and maintain a risk management culture that supports
safety, soundness and business objectives. In addition, CRM’s MRMG also fulfills some third line of defense responsibilities
pertaining to model validation.
Enterprise risk governance is supported by a number of risk-related, senior management committees. These governance
committees are responsible for ensuring effective risk measurement and management within their respective areas of authority,
and include the CRC, ALCO, CC, and PMC. The CRC is chaired by the CRO and supports the CRO in measuring and managing
our aggregate risk profile. ALCO is chaired by the CFO, and provides management and oversight of market, liquidity, and
balance sheet-related risks, and has the responsibility to optimize those risks in relation to the profitability of the underlying
businesses. The CC is also chaired by the CFO and provides management and oversight of our capital actions and our Enterprise
Stress Analytics, e.g., our CCAR/DFAST programs. PMC is chaired by the Wholesale Banking Executive and provides
oversight of balance sheet allocations to ensure that new asset originations and the purchase of assets available in the secondary
market meet our risk and business objectives. PMC also oversees progress towards long-term balance sheet objectives. The
CEO, CFO, and the CRO are members of each governance committee to promote consistency and communication.
Additionally, other executive and senior officers of the Company are members of these committees based upon their
responsibilities and subject matter expertise.