Barclays 2013 Annual Report Download - page 380

The following pages provide a comprehensive
overview of Barclays approach to risk
management and more specific information on
policies that the Group determines to be of
particular significance in the current operating
environment.
This section outlines the Group’s strategy for
managing risk and how risk culture has been
developed to ensure that there is a set of
objectives and practices which are shared across
the Group. It provides details of the Group’s
governance, how responsibilities are assigned and
the committee structure. The last section
provides an insight into how risk management is
part of the strategy setting process, including the
planning process, the setting of risk appetite and
stress testing across the Group.
These disclosures are unaudited unless otherwise stated
Barclays Risk Management Strategy (audited)
Barclays has clear risk management objectives and a well established
strategy to deliver them, through core risk management processes.
At a strategic level, the risk management objectives are to:
 Identify the Group’s significant risks;
 Formulate the Group’s risk appetite and ensure that the business
profile and plans are consistent with it;
 Optimise risk/return decisions by taking them as closely as possible
to the business, while establishing strong and independent review
and challenge structures;
 Ensure that business growth plans are properly supported by
effective risk infrastructure;
 Manage the risk profile to ensure that specific financial deliverables
remain possible under a range of adverse business conditions; and
 Help executives improve the control and coordination of risk taking
across the business.
In February 2013, Barclays announced the outcome of its strategic
review and set out its commitments for 2015 which are critical to
making Barclays the ‘Go-To’ bank for all its stakeholders.
As part of this commitment the Barclays ‘Go-To’ Enterprise Risk
Management Framework (ERMF) sets out the activities, tools,
techniques and organisational arrangements so that material risks
facing the Bank can be better identified and understood, and that
appropriate responses are in place to protect Barclays and prevent
detriment to its customers, colleagues or community. This will help the
Bank meet its goals, and enhance its ability to respond to new
opportunities.
The aim of the ‘Go-To’ risk management process is to provide a
structured, practical and easily understood set of three steps –
Evaluate, Respond and Monitor (the E-R-M process) – that enables
management to identify and assess those risks, determine the
appropriate risk response, and then monitor the effectiveness of the
risk response and changes to the risk profile.
1. Evaluate: Risk evaluation must be carried out by those individuals,
teams and departments that are best placed to identify and assess the
potential risks, and include those responsible for delivering the
objectives under review.
2. Respond: The appropriate risk response effectively and efficiently
ensures that risks are kept within appetite, which is the level of risk that
Barclays is prepared to accept whilst pursuing its business strategy.
There are three types of response: accept the risk but take the
necessary mitigating actions such as using risk controls; stop the
existing activity/do not start the proposed activity, or continue the
activity but lay off risks to another party e.g. insurance.
3. Monitor: Once risks have been identified and measured, and
controls put in place, progress towards objectives must be tracked.
Monitoring must be ongoing and can prompt re-evaluation of the risks
and/or changes in responses. Monitoring must be carried out
proactively and is wider than just ‘reporting’ and includes ensuring
risks are being maintained within risk appetite and checking that
controls are functioning as intended and remain fit for purpose.
The process is orientated around material risks impacting delivery of
objectives, and is used to promote an efficient and effective approach
to risk management. This three step risk management process:
 Can be applied to every objective at every level in the bank, both
top-down or bottom-up;
 Is embedded into the business decision making process;
 Guides our response to changes in the external or internal
environment in which existing activities are conducted; and
 Involves all staff and all three lines of defence (see page 380)
Barclays’ risk culture – enabling the ‘Go-To’ bank
In every area of Barclays’ activities, outcomes of decisions or actions
may be uncertain and could potentially impact whether, or how well,
the Group delivers against its objectives. Risk management, therefore,
plays a significant role in the Group achieving its goals and in turning
Barclays into ‘Go-To’ bank.
Barclays risk culture is the set of objectives and practices, shared across
the organisation, that drive and govern risk management.
Respond
Evaluate
Monitor
Risk management
Barclays risk management strategy
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378 Barclays PLC Annual Report 2013