Barclays 2013 Annual Report Download - page 386

Risk management
Barclays risk management strategy continued
The CRO is a member of the Executive Committee and has overall
day-to-day accountability for risk management under delegated
authority from the CEO. While the CEO is accountable for proposing a
risk appetite that underpins the strategic plan to the Board for approval,
the CRO is responsible for providing oversight, advice and challenge to
the CEO, and providing a recommendation to the Board. Risk appetite
therefore sets the ‘tone from the top’ and provides a basis for ongoing
dialogue between management and Board level around Barclays’
current and evolving risk profile.
The CRO manages the independent Group Risk function and chairs the
Financial Risk Committee (FRC) and the Operational Risk and Control
Committee (ORCC), which monitor the Group’s financial and non-
financial risk profile relative to established risk appetite. Reporting to
the CRO, and working in the Group Risk function, are risk type heads
for retail credit risk, wholesale credit risk, market risk, operational risk
and fraud risk. The risk type heads are responsible for establishing a
Group-wide framework for oversight of the relevant risks and controls.
The risk type teams liaise with each business as part of the monitoring
and management processes.
In addition, each business has an embedded risk management
function, headed by a Business Chief Risk Officer (BCRO). BCROs and
their teams are responsible for assisting business heads in the
identification and management of their business risk profiles and for
implementing appropriate controls. These teams also assist Group Risk
in the formulation of Group policies and their implementation across
the businesses. The business risk directors report jointly to their
respective business heads and to the CRO.
The risk type heads within the Group Risk function and the BCROs
within the businesses report to the Chief Risk Officer and are members
of the FRC or ORCC as appropriate.
During 2013 a Risk Executive Committee was created, which is
responsible for the effectiveness and efficiency of risk management and
embedding a strong risk culture, approval of the Group’s risk
governance framework, and agreement and endorsement of the overall
infrastructure strategy for the risk function. It is also the senior decision
making forum for the risk function excluding matters relating to the
risk profile. It is chaired by the CRO with a membership comprising
senior risk management from the risk centre and the businesses.
The CEO must consult the Chairman of the BFRC in respect of the Chief
Risk Officer’s performance appraisal and compensation as well as all
appointments to or departures from the role.
The Group Treasurer heads the Group Treasury function and chairs the
Treasury Committee which:
 Manages the Group’s liquidity, maturity transformation and structural
interest rate exposure through the setting of policies and controls;
 Monitors the Group’s liquidity and interest rate maturity mismatch;
 Monitors usage of regulatory and economic capital; and
 Has oversight of the management of the Group’s capital plan.
The Head of Compliance chairs the Conduct and Reputation
Committee which assesses quality of the application of the Reputation
and Conduct Risk Control Frameworks. It also recommends risk
appetite, sets policies to ensure consistent adherence to that appetite,
and reviews known and emerging reputational and conduct related
risks to consider if action is required.
Principal Risks (audited)
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.
The ERMF:
 Creates clear ownership and accountability;
 Ensures the Group’s most significant risk exposures are understood
and managed in accordance with agreed risk appetite (for financial
risks) and risk tolerances (for non-financial risks); and
 Ensures regular reporting of both risk exposures and the operating
effectiveness of controls.
A Principal Risk comprises individual Key Risk Types to allow for more
granular analysis of the risk associated within it. The six Principal Risks
are: i) Credit; ii) Market; iii) Funding; iv) Operational; v) Conduct; and vi)
Reputation.
Each Key Risk is owned by a senior individual known as the Group Key
Risk Officer who is responsible for developing a risk appetite statement
and overseeing and managing the risk in line with the EMRF. This
includes the documentation, communication and maintenance of a
risk control framework which makes clear, for every business across
the firm, the mandated control requirements in managing exposures to
that Key Risk. These control requirements are given further
specification, according to the business or risk type, to provide a
complete and appropriate system of internal control.
Business function heads are responsible for obtaining ongoing
assurance that the key controls they have put in place to manage the
risks to their business objectives are operating effectively. Six-monthly
reviews support the regulatory requirement for Barclays to make an
annual statement about its system of internal controls.
Group Key Risk Officers report their assessments of the risk exposure
and control effectiveness to Group-level oversight committees and
their assessments form the basis of the reports that go to the:
BFRC:
 Financial Risk Committee has oversight of Credit and Market Risks;
and
 Treasury Committee has oversight of Funding Risk.
and, BCRORC:
 Operational Risk and Control Committee has oversight of all
Operational Risk types, with the exception of Tax Risk, which is
primarily overseen by the Tax Risk Committee; and
 Conduct and Reputation Risk Committee has oversight of the
Conduct and Reputation Risks.
Each Group Key Risk Officer also undertakes an annual programme of
risk based conformance reviews.
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384 Barclays PLC Annual Report 2013