Bank of Montreal 2000 Annual Report Download - page 43

Bank of Montreal Group of Companies Annual Report 2000 ■19
Enterprise-Wide Strategic Management
Strategic Management Standards
■Strategies have been developed for each of the Bank’s lines
of business according to a rigorous set of standards.
■
Line of business and group strategies are updated, using
the same standards, at least annually or when significant
variances from committed financial or strategic perfor-
mance occur.
■Approved financial performance measurement principles
must be applied at the line of business and group levels to
the development of strategies and to every element of the
strategic management process.
■
The strategies must be reconcilable and reconciled to the
financial plan.
■
The value creation potential of a strategy is measured on a
risk adjusted basis against the provisional target of at least
doubling value every four years.
■Resources are allocated to value-creating businesses.
■
Financial and strategic performance commitments are
tracked and managed to ensure the delivery of strategies.
Approach
■Through the Office of Strategic Management, processes are
designed, developed and implemented to enable effective
strategic management decision-making throughout the Bank.
■
Clear and concise strategic management standards are
communicated through defined standards and formal and
informal training and coaching.
■
Dedicated professional personnel with a high degree of
strategic management expertise and knowledge of the
Bank’s strategic direction are in place.
Governance
■
Each line of business is responsible for the development and
execution of strategies, including the ongoing monitoring
of strategies.
■The Office of Strategic Management, which reports directly
to the Chief Executive Officer, oversees the strategy activities
and ensures adherence to standards.
■
Strategies are approved by the Bank’s Management Board
Executive Committee.
■
Group level strategies must be approved by the Board of
Directors once a year or when material changes occur.
■Significant line of business strategies, as well as significant
new business and change management initiatives, are also
presented to the Board of Directors for approval.
■
All other line of business strategies obtain final approval
from the Risk Review Committee of the Board of Directors.
Objective
Our objective is to develop and implement superior strategies at the line of business level in support of operating group and enterprise level strategies.
Developing a distinctive competency in strategic management is an important priority for the Bank.
Strategic management includes coordination of standards and activity related to establishing corporate and line of business targets, developing and
updating strategies, optimally employing resources, tracking and managing performance against commitments and linking compensation to performance.
The implementation of strategic management standards enables effective decision-making by ensuring dialogue around the highest-value strategic
issues, comparability in assessing investment opportunities and effective business mix and resource allocation decisions.
Enterprise-Wide Risk Management
Strategy
■
Identify, price and manage risk in order to maintain an
appropriate risk-return relationship;
■
Use comprehensive and integrated risk measurement and
reporting processes to ensure that risk is managed consis-
tently and effectively on an enterprise-wide basis; and
■Employ proven analytical techniques supported by business
experience and sound judgement to understand all dimen-
sions of the risks taken.
Approach
■Promote a strong, proactive culture which gives high value
to disciplined and effective risk management;
■
Communicate clear, concise risk management standards
through policies, directives, operating procedures and train -
ing, with adherence to the policies and procedures control
framework verified by an objective internal audit process;
Objective
Our objective is to earn competitive returns from our various business activities, at acceptable risk levels. Risk management involves overseeing the risks
associated with all our business activities in the environment in which we operate, and ensuring that risk-taking is within prudent boundaries and that the
prices charged for products and services properly reflect the risks we take. Risk is calculated in terms of impact on income and asset values. We assess
the potential effect on our business of changes in political, economic, market and operating conditions, and the creditworthiness of our clients using four
primary risk categories: credit/counterparty, market, liquidity and operational risk, as defined on page 20.
In the management of these risks we rely on:
■the competence and experience of our dedicated professional staff operating with due segregation of duties
■sophisticated, quantitatively based analytic tools
■ongoing investment in technology.
This combination of prudence, analytical skills and technology, together with adherence to our operating procedures, is reflected in the strength and
quality of our earnings over time.