Barclays 2012 Annual Report Download - page 60

 We were updated on Barclays Leveraged Finance business,
in particular, the performance of the portfolio and the level
of refinancing risk, which has reduced since the end of 2011.
Having reviewed the status, the Committee was content with the
actions being taken by management to monitor and mitigate
refinancing risk.
Internal Control and Risk Management Framework
The Committee conducted its annual review of the Group’s internal
control and risk management framework (GICAF) to ensure it
remains fit for purpose and concluded that it remained so. More
details on the GICAF and the Principal Risks Policy can be found in the
Directors’ Report on pages 64-66 and in the Risk management
section on pages 313-343. During 2012, we were updated on conduct
risk and the potential areas of focus for the Conduct Business Unit of
the FSA. This new focus on conduct risk is likely to have an impact on
Barclays Principal Risks Policy and we will assess how conduct risk is
reflected in Barclays risk management framework.
The Committee spent a significant amount of time on operational
risk matters in 2012, including a specific in-depth briefing session
on operational risk and the development of our operational risk
management framework. During the year we discussed the
effectiveness of the operational risk control framework and whether
Barclays control environment is effective relative to the size and
complexity of the business. With input from Barclays Internal Audit,
we subsequently looked in more detail at five businesses, Absa,
Barclays Africa, Investment Bank US, Wealth & Investment
Management US and Continental Europe, to assess the general
control environment and the resulting levels of operational risk in the
context of any growth plans for those businesses. We were satisfied
that any growth plans for those businesses are appropriate to the
control environment.
Due diligence
The Committee reviewed the due diligence process followed for the
acquisition of certain portfolios from Edcon Proprietary Limited and
ING Direct UK, to satisfy itself that the due diligence process in each
case was thorough. This included reviewing the impact of each
transaction on Barclays risk profile and risk appetite. In both cases,
the Committee concluded that the due diligence process had been
thorough and that the size and the impact of the acquisitions could
be accommodated within the Group's agreed risk appetite.
Remuneration
The Committee provided input to the Board Remuneration
Committee on the risk metrics to be used to determine financial
performance and reviewed the risk function’s view of performance,
which was used to inform remuneration decisions for 2012. The risk
perspective took into account specific matters, such as product
mis-selling redress, the penalties relating to the industry-wide
investigation into the setting of interbank offered rates and, at the
Committee’s request, internal control issues. The Remuneration
Report on page 72 includes more detail on how risk is taken into
account in remuneration decisions.
Committee Effectiveness
As part of the annual Board Effectiveness Review, the
performance of the Committee is assessed. This year’s review
concluded that the Committee continues to operate effectively
and there was a slight improvement in the overall score.
Priorities for 2013
I expect the Committee in 2013 to continue to focus on
monitoring the risk to Barclays business from the ongoing weak
economic conditions in its main geographies. We will also
maintain our focus on capital and liquidity, particularly in view
of the implementation of CRD IV. The Committee will also seek
to understand and act upon any changes required to Barclays
risk management framework that might arise as a consequence
of the new regulatory regime in the UK.
David Booth
Chairman, Board Risk Committee
Corporate governance report
Accountability continued
Board Risk Committee Chairman’s report continued
barclays.com/annualreport58 I Barclays PLC Annual Report 2012