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14 | BMO Financial Group 191st Annual Report 2008
Eighteen months ago, we launched a review of how
we measure and manage risk at BMO. This exercise
confirmed some significant strengths, particularly
in credit risk, where we have outperformed our peers
for some years. The review also identified oppor -
tunities for improvement, and we embarked on a
program of change immediately.
The agenda of our Risk Evolution Initiative is centred
on four themes: ownership and accountability,
transparency, optimizing risk-return and building
partnerships (see table at right).
We have made significant progress on all of these,
including the appointment of a new Chief Risk Officer
(CRO), reporting to the Chief Executive Officer.
Our Risk Evolution Initiative is focused on managing
risk in the current environment and building our
capabilities for the future.
In the current environment, this means taking
steps to reduce volatility, limiting our activity
in some areas and managing credit more actively.
With respect to building our capabilities, we are
adding seasoned risk leaders in select areas,
enhancing risk education across the enterprise,
clarifying accountabilities for managing risk among
the business units, risk management and other
control functions, focusing on greater risk trans-
parency and more rigorous reporting, and improving
the quality and the frequency of the dialogue
we have about risk in all of our lines of business.
At the same time, we’ve appointed chief risk officers
to support each of the main businesses. This will
ensure an integrated view of risk at the business unit
level, as well as a solid partnership with business
unit leaders in managing the risk they undertake.
In strengthening our risk management practices
and culture, we’re making solid progress toward our
objective of consistent leadership in the manage-
ment of risk.
PROGRESS REPORT
Refining risk management
for the global market
We believe disciplined risk management is essential to building competitive
advantage. The past year has confirmed the value of consistent leadership
in the management of risk and we continue to make significant progress in
evolving our risk management programs and making the most effective use
of our balance sheet in creating value.
BMO was and remains proactive. For us, risk management has a twofold objective: to provide appropriate
and independent risk oversight across the enterprise, and to partner with all of our lines of business in
generating sustainable shareholder returns.
i
P 73