Wells Fargo 2014 Annual Report Download - page 58

Risk Management (continued)
Management Oversight of Risk
In addition to the Board level committees that consider risk
issues, the Company has established several management-level
governance committees (governance committees) to support
Wells Fargo leaders in carrying out their responsibilities to
manage risk on a daily basis. Each governance committee has a
defined set of authorities and responsibilities specific to a
single risk type or set of risk types. Accordingly, risk
governance committees are responsible for making decisions
on risk issues in line with each committee’s authorities, or
escalating issues up the committee structure for further
consideration.
The Enterprise Risk Management Committee, chaired by
the Wells Fargo Chief Risk Officer, oversees the management
of all types of risk across the Company. The Enterprise Risk
Management Committee reports into and escalates matters
directly to the Board’s Risk Committee, and as such serves as
the focal point for risk governance and monitoring at the
management level. The Enterprise Risk Management
Committee is responsible for monitoring and evaluating the
Company’s risk profile relative to its risk appetite across risk
types, businesses, and activities; providing active oversight of
risk mitigation and the adequacy of risk management
resources, skills, and capabilities across the enterprise;
reporting periodically to senior management and the Board on
the most significant current and emerging risks, risk
management issues, initiatives, and concerns; and addressing
key risk issues which are escalated to it by its members or its
reporting committees.
A number of governance committees that are responsible
for issues specific to an individual risk type report into the
Enterprise Risk Management Committee, including the Market
Risk Committee, the Corporate Model Risk Committee, the
Counterparty Credit Risk Committee, the Operational Risk
Management Committee, the Regulatory Compliance Risk
Management Committee, the BSA/AML (Financial Crimes)
Risk Committee, the International Oversight Committee, and
the Legal Entity Governance Committee. Certain of these
governance committees have dual escalation and/or
informational reporting paths to the Board level committee
primarily responsible for the oversight of the specific risk type.
The Market Risk Committee is responsible for addressing
key market risk management issues related to the Company’s
trading, hedging, market-making, and investment activities.
The Corporate Model Risk Committee assists in evaluating and
managing the Company’s exposure to model risk and conducts
oversight of the model risk management processes. The
Counterparty Credit Risk Committee provides broad oversight
of Wells Fargo’s counterparty risk-taking activities and issuer
concentration risk. The Operational Risk Management
Committee’s primary responsibility is to understand
operational risk issues and concerns and work with
management across the Company to ensure risks are managed
effectively. The mandates of the Regulatory Compliance Risk
Management Committee and the BSA/AML (Financial Crimes)
Risk Committee are to provide forums through which material
regulatory compliance and BSA/AML risks of the Company,
respectively, are appropriately identified, communicated,
escalated, and managed within the Company’s corresponding
risk management frameworks.
The International Oversight Committee provides broad
oversight of the Company’s foreign risk exposure to ensure it is
consistent with the overall risk appetite of the Company. The
Legal Entity Governance Committee provides executive
leadership and oversight of the legal entity lifecycle framework
and related corporate policies.
While the Enterprise Risk Management Committee and
the committees that report to it serve as the focal point for the
management of enterprise-wide risk issues, the management of
specific risk types is supported by additional management-level
governance committees. These committees include the SOX
Disclosure Committee, the Regulatory Reporting Oversight
Committee, the Capital Reporting Sub-committee, which all
report to the Board’s Audit & Examination Committee; the
Stress Testing Committee, the Corporate Asset and Liability
Committee, the Economic Scenario Approval Committee,
which all report to the Board’s Finance Committee; the
Allowance for Credit Losses Approval Committee, which
reports to the Board’s Credit Committee; and the Incentive
Compensation Committee and the Employee Benefit Review
Committee, which both report to the Board’s Human
Resources Committee.
These committees help management facilitate enterprise-
wide understanding and monitoring of risks and challenges
faced by the Company. Management’s corporate risk
organization, which is part of the second line of defense, is
headed by the Company’s Chief Risk Officer who, among other
things, provides oversight, opines on the performance and
strategy of all risks taken by the businesses, and provides
credible challenge to risks incurred. The Chief Risk Officer, as
well as the Chief Enterprise, Credit, Market, Compliance,
Operational, Information Security and Financial Crimes Risk
Officers as his or her direct reports, work closely with the
Board’s committees and frequently provide reports and
updates to the committees and the committee chairs on risk
issues during and outside of regular committee meetings, as
appropriate. The full Board receives reports at each of its
meetings from the committee chairs about committee
activities, including risk oversight matters, and receives a
quarterly report from the Enterprise Risk Management
Committee regarding current or emerging risk issues.
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