Barclays 2007 Annual Report Download - page 142

Corporate governance
Corporate governance report
140 Barclays PLC Annual Report 2007
Board Risk Committee
Sir Richard Broadbent (Chairman)
David Booth (from 1st January 2008)
Dr Danie Cronjé
Sir Andrew Likierman
Stephen Russell
Secretary: Lawrence Dickinson
Risk is a key parameter of Barclays business. Accordingly, the Board has
established a Board Risk Committee to provide Board level monitoring
and oversight of all Barclays risk activities.
The Board Risk Committee’s terms of reference are available from
the Corporate Governance section at: http://www.aboutbarclays.com.
In addition to its members, all meetings are attended by the Group
Finance Director and the Barclays Risk Director. Attendees at meetings
may also include Barclays Internal Audit Director, Barclays General Counsel
and the Barclays external auditor, as well as other senior executives, who
join for specific topics.
Approach
The Committee approaches its task primarily by:
– receiving from the Barclays Risk Director and discussing a detailed risk
report at every meeting;
– reviewing in depth specific topics or areas of risk that the Committee
identifies as meriting detailed analysis;
– reviewing stress scenarios;
– reviewing historic risk tendencies and experiences;
– monitoring risk appetite and the Group’s risk profile. The Committee
recommends to the Board each year an appropriate level and
composition of risk for the coming year.
In addition, the Committee:
– reviews the internal control framework;
– examines the risk control framework, and approves Group policies
including the trading book policy, liquidity policy, credit impairment
policy and principal risks policy; and
– receives updates on risk measurement methodologies.
Activities in 2007
The Committee requested at the end of 2006 that the US mortgage
business be reviewed early in the year as one of the key risk issues. This was
presented in March 2007 and included an analysis of stress loss scenarios
under adverse market conditions. Management took decisions during the
first half of 2007 to reduce limits in this business and, given the volatility in
the credit markets during 2007, the Committee subsequently received
regular reports on market conditions.
During 2007, the Committee also reviewed, in depth, leveraged credit
and asset backed securities markets, including the Group’s counterparty
exposures. It considered whether there were any signs of material
contagion in other markets in which the Group operates. The Committee
examined how the Group’s risk controls and stress limits had operated
in the prevailing market conditions and was satisfied that risk controls
had operated as anticipated. The Committee reviewed the impact on
impairment and mark-to-market positions and the impact on the
Group’s balance sheet of the market conditions. The Committee also
monitored progress in meeting the new capital regime introduced under
Basel II and continued to review the retail credit experience.
The chart below left shows how the Committee allocated its time at its
meetings in 2007.
In March 2008, the Committee will review its activities in 2007 against
its terms of reference.
More information on risk management and the internal control framework
can be found in the Risk management report on pages 80 to 89.
Board Corporate Governance and
Nominations Committee
Marcus Agius (Chairman)
Sir Richard Broadbent
Sir Nigel Rudd
Stephen Russell
Sir John Sunderland
Secretary: Lawrence Dickinson
The Board Corporate Governance and Nominations Committee terms
of reference are available from the Corporate Governance section at:
http://www.aboutbarclays.com
The meetings are also attended by the Group Chief Executive.
Activities in 2007
The chart below right shows how the Committee allocated its time at its
meetings in 2007. During 2007, the Committee:
– regularly reviewed Board and Board Committee composition to
ensure the right mix of skills and experience are present;
– recommended the appointment of David Booth, Sir Michael Rake and
Patience Wheatcroft as non-executive Directors;
– monitored the progress of the action plan arising from the 2006
Board Effectiveness Review and oversaw the conduct of the 2007
Board Effectiveness Review;
– reviewed the corporate governance disclosures for the 2006 Annual
Report and considered the proposed disclosures for 2007;
– reviewed and updated Corporate Governance in Barclays and the
Charter of Expectations; and
– reviewed succession plans for the Executive Committee and the
position of Group Chief Executive.
Board Risk Committee allocation of time
1
2
34
1 Risk profile/Risk appetite 40%
2 Key Risk issues 40%
3 Internal control/Risk policies 3%
4 Regulatory frameworks 12%
5 Other 5%
5
Board Corporate Governance and Nominations Committee
allocation of time
1
2
3
4
1 Corporate Governance matters 23%
2 Board and Committee composition
(including succession planning) 46%
3 Board effectiveness 20%
4 Other 11%