Wells Fargo 2015 Annual Report Download - page 63

Management Oversight of Risk
In addition to the Board committees that oversee the
Company's risk management framework, the Company has
established several management-level governance committees
to support Wells Fargo leaders in carrying out their risk
management responsibilities. Each risk-focused governance
committee has a defined set of authorities and responsibilities
specific to one or more risk types. The risk governance
committee structure is designed so that significant risk issues
are considered and, if necessary, decided upon at the
appropriate level of the Company and by the appropriate
leaders.
The Enterprise Risk Management Committee, chaired by
the Wells Fargo Chief Risk Officer, oversees the management
of all risk types across the Company, and additionally provides
primary oversight for reputation risk and strategic risk. The
Enterprise Risk Management Committee reports to the Board's
Risk Committee, and serves as the focal point for risk
governance and oversight 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. The Enterprise Risk
Management Committee annually reviews the Company’s
Strategic Plan, with a primary view toward ensuring alignment
with the Company’s risk appetite.
Our CEO and Operating Committee develop our enterprise
statement of risk appetite in the context of our risk
management framework and culture described above. As part
of Wells Fargo’s risk appetite, we maintain metrics along with
associated objectives to measure and monitor the amount of
risk that the Company is prepared to take. Actual results of
these metrics are reported to the Enterprise Risk Management
Committee on a quarterly basis as well as to the Risk
Committee. Our operating segments also have business-
specific risk appetite statements based on the enterprise
statement of risk appetite. The metrics included in the
operating segment statements are harmonized with the
enterprise level metrics to ensure consistency where
appropriate. Business lines also maintain metrics and
qualitative statements that are unique to their line of business.
This allows for monitoring of risk and definition of risk
appetite deeper within the organization.
A number of management-level governance committees
that are responsible for issues specific to an individual risk type
report into the Enterprise Risk Management Committee. These
governance committees include the:
• Counterparty Credit Risk Committee
• Credit Risk Management Committee
• Enterprise Technology Governance Committee
• Fiduciary & Investment Risk Oversight Committee
• Financial Crimes Risk Committee
• International Oversight Committee
• Legal Entity Governance Committee
• Liquidity Risk Management Oversight Committee
• Market Risk Committee
• Model Risk Committee
• Operational Risk Management Committee, and
• Regulatory Compliance Risk Management Committee
Certain of these governance committees have dual escalation
and/or informational reporting paths to the Board committee
primarily responsible for the oversight of the specific risk type.
In addition, certain management-level risk committees,
including those that oversee risk for Community Banking,
Consumer Lending, WIM, and Wholesale Banking, report into
the Enterprise Risk Management Committee.
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:
• Ethics & Integrity Oversight Committee, Regulatory and
Risk Reporting Oversight Committee, Capital Reporting
Committee, and SOX Disclosure Committee, which all
report to the Board’s A&E Committee
• Corporate Asset and Liability Committee, Economic
Scenario Approval Committee, and Stress Testing
Oversight Committee, which all report to the Board’s
Finance Committee
• Allowance for Credit Losses Approval Committee, which
reports to the Board’s Credit Committee
• Incentive Compensation Committee, which reports to the
Board’s Human Resources Committee
The Company’s management-level governance committees
collectively help management facilitate enterprise-wide
understanding and monitoring of risks and challenges faced by
the Company.
Management’s Corporate Risk organization, which is the
Company’s primary second-line of defense, is headed by the
Company's Chief Risk Officer who, among other things, is
responsible for setting the strategic direction and driving the
execution of Wells Fargo’s risk management activities.
The Chief Risk Officer, as well as the Chief Risk Officer’s
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.
Wells Fargo & Company
61