Barclays 2013 Annual Report Download - page 131

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Control functions’ review of compensation
The Remuneration Review Panel has been introduced to ensure
appropriate and meaningful control function input into compensation
decisions. The Remuneration Review Panel is independent of the
business and its membership includes the control functions. As part of
its remit the Panel makes recommendations to RemCo on risk
adjustments to the incentive pools, and individual malus and
suspensions. Control function input includes information relating to
behaviour and conduct issues. Managers have also received guidance
on incorporating risk and control behaviours when determining reward
recommendations.
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Board’s role in compensation oversight
The Board has established a new Remuneration Policy (see pages 100
to 110) which sets out clear principles and is aligned to our Purpose,
Values and Behaviours. The Remuneration Committee Terms of
Reference require consideration and approval of remuneration
arrangements for high earners and colleagues who influence the risk
profile of the organisation. The RemCo formally reports to the Board
after each meeting. It works closely with the Board Risk Committees and
receives risk input from the Chief Risk Officer at each meeting, an annual
‘Risk Perspective on Performance’ assessment as well as input from the
Remuneration Review Panel. The Remuneration Committee annually
reviews the appointment of its independent advisor which must adhere
to the UK Code of Conduct for executive remuneration consultants.
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Risk culture and control framework
The Barclays ERMF published in December 2013 sets risk appetite
principles; defines risk appetite accountabilities for the CEO and CRO;
and defines the roles and responsibilities across the three lines of
defence. Risk appetite statements were set and approved by the
BEWRC in December 2013. Colleagues are now assessed against
mandatory risk and control objectives, in particular, front office
Investment Bank colleagues’ objectives specifically refer to
unauthorised trading.
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Conduct, reputational and operational risk
The Barclays ERMF, together with the defined risk appetite statements
and upcoming Key Risk Control Frameworks factor conduct,
reputational and operational risks into business decisions and
governance. Further, the Strategic Risk Assessment piloted in 2013
provides a top down view of business unit strategy integrating strategic
planning activity, appetite setting and the assessment and
management of material risks.
30
Issue escalation
In 2013 we ran an awareness raising whistleblowing campaign,
including creation of an independent, external whistleblowing hotline
run by Public Concern at Work. The Behaviours we expect, in line with
our Values, mandate a colleague responsibility to have courage to
speak up when they believe something is wrong. Senior Leaders are
working to address perceived issues around raising concerns; feedback
from colleagues suggests more work is required in this area.
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Learning from mistakes
A Group-wide methodology for learning from mistakes relating
specifically to Operational Risk was launched in January 2013. Over
2014 we will look to improve this process and investigate the potential
to build out this methodology across all risk types so as to be able to
apply lessons learnt more broadly.
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Control functions’ independence and influence
We announced a new functional operating model in January 2013
which promotes the independence and authority of our control
functions. Compliance, Risk, Legal, Finance and HR now have solid
reporting lines into the Group Function Head. Appointment of Head of
Compliance is subject to consultation with the Chairman and Chairman
of the BCRORC. We are also reinforcing the compliance culture
throughout the bank, ‘Building an Effective Control Environment’ is a
core capability that underpins our development approach across all
levels.
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Internal Audit
In July 2012 we introduced a revised audit methodology to improve
efficiency and effectiveness. We will continue to review the audit
schedule and methodology to ensure both are fit for purpose. We
conduct regular internal and external skills assessment reviews to
ensure our audit teams have the appropriate skills and experience
aligned to each business, with particular deep dives into the Investment
Bank team. In 2013 our Internal Audit Charter was reviewed and
updated to reflect the requirement to provide assurance on the risk
culture of the firm – we will continue to refresh the Charter annually.
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Implementation
This section of the Annual Report provides a summary of our progress
on implementation. This and all previous editions can be found on our
website.
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