Barclays 2005 Annual Report Download - page 53

Barclays PLC
Annual Report 2005 51
concerned by the general rise in identity theft and we are taking extra
precautions to protect our brand.
The principal area of regulatory change ahead of us is the new Basel II
Accord. The successful implementation of the provisions of the
Accord, scheduled for 2008, involves data, model and system changes
in many of our businesses and we have made a significant investment
in this area. The main purpose of the Accord is to provide a more
sophisticated risk framework for the industry. We have worked to
position Barclays at the leading edge of risk management and we
believe that our goal of achieving advanced status is appropriate and
realistic. We expect our Basel II capital measures to be more closely
aligned to our internal economic capital measures, and this should
allow us to manage our capital ratios more effectively over time.
We remain committed to our objective of increasing shareholder value
by developing and growing business that is consistent with our risk
appetite, and through building more effective and sophisticated
risk/return management capabilities. We are confident that we are
achieving an appropriate balance in our business, and that we are
continuing to build the risk management capabilities that will help us
to deliver our growth plans.
Robert Le Blanc
Risk Director
Risk Management
The pages that follow describe our approach to risk management.
This first section deals with the overall approach – applicable to all
risks. It is followed by material covering individual types of risk.
The narrative contains quantitative information mainly in graphical
format. In most cases the same data appear in tables in a statistical
section beginning on page 78.
Risk Management Process
Barclays applies a five-step approach to risk management.
Responsibilities
Direct •Understand the principal risks to achieving
Group strategy.
•Establish risk appetite.
•Establish and communicate the risk management
framework including responsibilities, authorities
and key controls.
Assess •Establish the process for identifying and
analysing business-level risks.
•Agree and implement measurement and
reporting standards and methodologies.
Control •Establish key control processes and practices,
including limit structures, provisioning criteria
and reporting requirements.
•Monitor the operation of the controls and
adherence to risk direction and limits.
•Provide early warning of control or appetite
breaches.
•Ensure that risk management practices and
conditions are appropriate for the business
environment.
Report •Interpret and report on risk exposures,
concentrations and risk-taking outcomes.
•Interpret and report on sensitivities and Key
Risk Indicators.
•Communicate with external parties.
Manage and •Review and challenge all aspects of the Group’s
Challenge risk profile.
•Assess new risk-return opportunities.
•Advise on optimising the Group’s risk profile.
•Review and challenge risk management practices.
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