Barclays 2013 Annual Report Download - page 228

Subsequent erosion of the bank’s brand reduces the attractiveness of
Barclays to those stakeholders and, therefore, the ability to achieve the
Group’s goals and business purpose.
The cost of reputation risk could manifest itself in one, or a
combination of, the following outcomes: negative publicity; erosion of
customer/client confidence; loss of revenue; litigation; regulatory or
legislative action; loss of existing and potential client business; reduced
internal morale; and difficulties in recruiting the talent required to
deliver our commitments. Ultimately, it may destroy long-term
shareholder value.
Reputation risk is pervasive in nature and may arise for a wide variety of
reasons, real or perceived, for example:
 Failure to act in accordance with our stated values, standards and
policies;
 Association with illegal activity or governance or regulatory breaches;
 Failure of technical systems and processes;
 Association with controversial clients or sectors; and
 Association with controversial business decisions or conduct relating
to products, service provision, acquisitions, and employment
practices.
Barclays’ reputation may also be impacted negatively by the standing
of the banking and financial industry generally with stakeholders. Poor
practice or controversy perpetrated by other banks affects the sector as
a whole.
As reputation risk arises from a real or perceived failure to comply with
expected norms, which are likely to change over time, the situation is
not static. Today’s decisions may be judged tomorrow by different
standards and this needs to be factored into our risk culture, evaluation
and sanctioning procedures. Reputation risk is also pervasive, it can
arise anywhere in the organisation, and management of it requires
more subjective judgement than many other risks.
Barclays experienced a number of events negatively impacting its
reputation in 2013, some of which arose as a result of decisions and
behaviours which occurred in prior years. For example, Barclays’
participation in the submission of London interbank lending rates
(LIBOR) between 2005 and 2009 fell short of the high standards by
which we aim to conduct business. Barclays let down its customers
and clients and regrets that these actions harmed trust and confidence
among our stakeholders. While the findings involved only a relatively
small number of the Group’s 140,000 employees, Barclays has fully
acknowledged and accepted responsibility for this past conduct. With
interest rate hedging products, Barclays recognises that we have not
met the standards expected of us by our regulator and customers in
some cases concerning small and medium-sized enterprises.
Barclays also took the decision to exit client relationships in the Money
Service Business (MSB) sector because of financial crime and
regulatory risks in the sector. Although we consider that this decision
was necessary from a regulatory perspective, unfortunately it has
impacted on businesses in this sector and the customers they serve.
Lessons learnt and remediation activity
Barclays has undertaken a range of initiatives to strengthen
governance, drive positive cultural change through the organisation
and apply a responsible and consistent ‘lens’ to decision-making.
In 2013, reputation risk was elevated by Barclays to Principal Risk status
in acknowledgement of its significance for the business. Governance of
all Principal and Key Risks is being revised and strengthened as part of
the Transform initiative and in 2014 has been aligned with the new
Enterprise Risk Management Framework, which will ensure all risks are
managed in a co-ordinated manner according to consistent
parameters.
Governance around the management of reputation risk is designed to
promote such a consistent approach and a risk-aware culture across
our organisation globally. Every member of staff must take
responsibility for managing reputation risk associated with their
decisions and actions. The implementation of The Barclays Way, the
bank’s global code of conduct launched in October 2013, encourages
Barclays’ colleagues to speak up if they encounter decisions or
behaviours which are not in keeping with Barclays’ purpose and values,
and promotes a more open culture conducive to the identification,
management and reporting of reputation and other risks. Colleagues in
all parts of the bank have attended values workshops and are required
to attest annually to The Barclays Way, which explains how Barclays’
values and desired behaviours should be put into practice at work.
Where individuals are confronted by a decision which appears to have
wider reputational consequences, they are supported by a clear set of
processes outlined in the Barclays Reputation Risk Framework that
articulates how businesses and functions should identify and manage
this risk, including how to escalate an issue. The objective is to ensure
that all decision-making includes an evaluation of the reputation risk
potential and that, where material risk is identified, this is managed at
the right level of seniority and in a timely way.
Reputation risk is the risk of damage to Barclays brand arising from any association, action or inaction which
is perceived by stakeholders (e.g. customers, clients, colleagues, shareholders, regulators, opinion formers) to
be inappropriate or unethical.
All disclosures in this section (pages 226 and 227) are unaudited
Risk review
Reputation risk
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226 Barclays PLC Annual Report 2013