Barclays 2013 Annual Report Download - page 17

Group overview 02
Chief Executive’s strategic review 04
Strategy and operating environment 06
Business model/Value creation 08
Balanced Scorecard 10
Group Finance Director’s review 12
Strategic Risk overview 14
Performance review by division 18
Chairman’s governance overview 46
Summary remuneration report 48
In this section the Group Chief Risk
Office gives a summary of key changes
in Principal Risks during 2013.
Future priorities
At a time of significant internal and external change and uncertainty
in the business environment, it is important that we continue to
keep our customers at the forefront of our activities while meeting
new regulatory requirements and improving effectiveness in the risk
management process. Our priorities for 2014 reflect these aims and
include:
 Providing our customers with faster decisions and enhancing
support for those experiencing difficulties
 Closely managing funding and liquidity risk including
redenomination risk
 Meeting regulatory expectations in relation to the PRA Leverage
Ratio during 2014
 Implementing and embedding the ERMF across Risk including
further enhancement of reputation and conduct risk management
 Continuing to manage and control impairment across the firm
 Continuing to enhance and strengthen our operational risk
management processes
 Further enhancing Recovery and Resolution Planning and
responding to regulatory requirements for structural reform (e.g.
UK Retail Ring Fence)
Key influences on risk in 2013
In 2013, a number of risks were considered and dealt with in order to
minimise impact on the Group’s performance and ability to meet its
goals and priorities. These included, but were not limited to:
 Uncertain economic environment, including GDP growth, inflation,
property values and unemployment
 Political uncertainty in a number of countries which could have
adversely impacted the Group’s retail and institutional customers
 The risk of a Eurozone crisis whereby a sovereign may default and
exit from the Eurozone. While this receded somewhat during 2013 it
could have resulted in losses to the Group through, for example,
redomination risk
 Changes in both the level and volatility of prices, for example, interest
rates, credit spreads, commodity prices, equity prices and foreign
exchange rates, which could impact earnings or capital
 Potential operational risk of service disruption to customers as a
result of failed systems or human errors, or increasing threat from
cyber-attacks and breaches of security, with adverse effects on the
Group’s reputation, operations and financial condition
 Increased levels of legal proceedings in jurisdictions where it
operates, and changing legal and regulatory environments, which
could lead to fines, public reprimands and damage to reputation
 Changing and uncertain regulatory environment
Risk and business strategy
The risk function plays a significant role in review and challenge of risks
inherent within business plans and strategy by verifying that they fall
within financial volatility risk appetite and incur a level of risk that is
individually and in aggregate acceptable to the Board, or be modified
accordingly. The Group-wide stress testing process is similarly linked to
the medium term planning process and also supports strategic
planning and capital adequacy. Barclays manages human rights risk via
our environmental and social risk procedures and guidance and our
reputational risk framework and continues to work collaboratively with
others in our sector on integration of human rights issues into business
decision making. Risk management responsibilities are laid out in the
ERMF, which covers the categories of risk in which Barclays has its
most significant actual or potential risk exposures, which are known as
Principal Risks (see table on the following pages).
Robert Le Blanc
Chief Risk Officer
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