Barclays 2015 Annual Report Download - page 57

home.barclays/annualreport Barclays PLC Annual Report 2015 I 55
Area of focus Matter addressed Role of the Committee Conclusion/action taken
Political and
economic risk, i.e. the
impact on the Group’s
risk profile of political
and economic
developments and
macroeconomic
conditions.
The potential impact on the Group’s
risk profile of political developments,
such as the UK general election and
budget statement, the potential exit of
countries from the Eurozone, and
weakening macroeconomic
conditions, such as disruption and
volatility in financial markets.
 Assessed the potential impact of
the UK general election and steps
that could be taken to manage any
market volatility.
 Evaluated the potential risks arising
from a general macroeconomic
slowdown and from financial
markets disruption, including the
global impact of the economic
slowdown in China.
 Assessed global consumer
indebtedness indicators and the
potential impact of rising consumer
debt on the Group’s risk profile.
 Debated the Group’s Eurozone
exposures in the context of the
potential break-up of the Eurozone
in the event of a Greek exit and
assessed the Group’s levels of
redenomination risk in the
Eurozone.
The Committee asked management to
evaluate macroeconomic conditions and
market indicators to inform the strategic
plan and risk appetite proposals for 2016,
so that the Group is positioned
appropriately.
Retail credit risk, i.e.
UK property market,
interest rate risk.
The potential overheating of the UK
housing market, particularly in London
and the South East and the Group’s
risk appetite for and management of
sectors such as the buy-to-let sector.
 Debated UK property market
indicators and conditions,
particularly in the high loan to value
(LTV) and the buy-to-let markets
and potential economic and political
risks to that market.
 Evaluated the Group’s lending
criteria and its approach to
assessing customers on
affordability.
 Assessed the potential impact of an
increase in interest rates on
customers, including how
customers had been stress tested
and assessed against affordability
criteria.
The Committee encouraged
management to continue to take a
conservative approach to UK mortgage
lending in the buy-to-let market and
emphasised the need to keep risks and
exposures within agreed appetite.
Specific sector risk,
i.e. the Group’s risk
profile in sectors
showing signs of
stress, such as the oil
sector.
The Group’s exposures to the oil and
commodities sectors in light of the
price weakness and volatility in these
sectors during 2015.
 Regularly assessed the Group’s
exposures to the oil sector, including
assessing steps taken with regard to
the credit strategy for the sector,
how the portfolio was performing
and whether this was in line with
expectations.
 Evaluated the Group’s exposures to
the commodities sector and actions
taken to identify any names at risk
and reduce exposures.
The Committee supported the actions
that had been taken by management to
manage the Group’s risks and exposures
to the oil and commodities sectors. It
requested a stress test to assess the
impact of further (and longer) oil price
weakness on the Group’s lending
portfolio, including indirect exposure.
Operational Risk
From 1 July 2015, the
Committee took
responsibility for
oversight of the
capital and financial
aspects of operational
risk.
The Group’s operational risk capital
requirements and any material
changes to the Group’s operational
risk profile and performance versus
risk appetite.
 Evaluated operational risk capital
and debated the potential for an
increase in regulatory operational
capital requirements.
 Debated whether Barclays advanced
status for calculating operational
risk capital should be retained.
 Tracked operational risk key
indicators via regular reports from
the Head of Operational Risk.
The Committee focused its oversight of
operational risk on the financial and
capital implications, debating in
particular the potential impact of
regulatory operational risk requirements.
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