Barclays 2003 Annual Report Download - page 39

Barclays PLC Annual Report 2003 37
Barclays aims to employ superior risk practices to
optimise financial performance and value. Our approach
to risk management and control continued to evolve in
2003 to reflect best practice. The Group takes risks that
are commensurate with the associated returns and within
its overall risk appetite.
Risk governance framework
Barclays risk governance framework is based on the following:
• Risk appetite is approved by the Board.
• Internal controls focus on risks that could prevent the Group
from creating outstanding shareholder value.
• Risk management systems provide management with assurance
that risks are being managed appropriately and that the internal
controls are adequate.
• Responsibility for internal controls is clearly defined and
documented.
• Staff training supports the risk culture and ensures that risks are
regularly monitored and that corrective action can be taken in a
timely manner.
• The Group’s risk profile is reviewed on a regular basis.
• The Board systematically monitors the effectiveness of the risk
management processes and systems of internal control at least
annually.
During 2003, initiatives were pursued to build on the establishment of
the Board Governance Standards (‘Standards’) in 2002. The Standards
are high-level articulations of the Board’s risk control requirements,
covering what are considered to be the principal risks to the
achievement of the Group’s objectives. Risk reporting to the Board Risk
Committee is aligned to the Standards.
The risk governance framework is being aligned with the internationally
accepted standard ‘Internal Control – Integrated Framework’ published
by the Committee of Sponsoring Organisations of the Treadway
Commission.
Barclays operates in a highly regulated industry and is engaged in
responding to significant changes in the regulatory environment, for
example, from the implementation of Basel II, International Financial
Reporting Standards and the US Sarbanes-Oxley Act. These changes,
which directly affect risk management, necessitate considerable
resources to amend or re-design our systems and reporting
processes. Under Basel II, Barclays aims to achieve advanced status
in all risk categories.
Responsibilities for Risk Management and Control
The responsibilities for risk management and control within the overall
governance framework rest with:
• the Board, which ensures that management maintains an effective
system of internal control and reviews its effectiveness;
• the Group Risk Director, under delegation from the Group Chief
Executive, who has responsibility for the adequacy of risk
management and control;
• business leaders, who are responsible for the identification and
management of the risks in their businesses;
• business risk Directors and their teams in the businesses, who are
responsible for assisting business leaders in the identification and
management of their business risk profiles;
• Group Risk Type Heads and their teams in the Group Centre, who are
responsible for the risk control oversight of credit risk, market risk,
operational and business risk, and regulatory compliance risk;
• other Function Heads in the Group centre, who are responsible for the
risk control oversight of risks within their functional responsibilities;
• Group Internal Audit which is responsible for the independent review
of the control environment.
Committee Oversight
The execution of these responsibilities is guided and monitored by:
• the Group’s management committees. The main risk and governance
committees and their principal risk management and control
responsibilities are shown in the risk governance structure chart on
page 38. The committees’ roles are reviewed and refreshed regularly;
• business and regional Governance and Control Committees. These
committees report to the Group Governance and Control Committee.
Together, they are responsible for ensuring that business risk
governance and control frameworks have been established in each
business, consistent with the Group’s risk governance and control
framework. They also review and assess the completeness and
effectiveness of, and compliance with, internal controls within
each business.
Risk Management
Risk Management and Control – Overview