Discover 2010 Annual Report Download - page 23

Audit and Risk Committee of our Board of Directors. The Audit and Risk Committee of our board of directors reviews
reports from management on our enterprise-wide risk management program and reviews with management the
framework for assessing and managing our risk exposures and the steps management has taken to monitor and control
such risk exposures. The Committee also reviews reports from management on the status of and changes to risk
exposures, policies, procedures and practices.
Risk Committee. Our Risk Committee is a management-level committee, authorized by the Audit and Risk Committee of
our board of directors and chaired by our Corporate Risk Officer, that provides a forum for key members of our executive
management team to review and discuss credit, market, liquidity, operational, legal and compliance and strategic risks
across the company and for each business unit. Risk Committee membership consists of all members of the Executive
Committee and the Corporate Risk Officer. The Committee regularly reports to the Audit and Risk Committee of our board
of directors on risks and risk management. Our Risk Committee has formed a number of committees to assist it in carrying
out its responsibilities. Each committee is guided by a charter that defines the mandates of the committee in further detail.
These committees, made up of representatives from senior levels of management, escalate issues to our Risk Committee as
necessary. These risk management committees include the Asset/Liability Management Committee, the Capital Planning
Committee, the Counterparty Credit Committee, the Discover Bank Credit Committee, the Discover Bank Pricing
Committee, the Payment Services Steering Committee, the New Initiatives Committee, the Operational Risk Committee and
the Privacy and Policy Committee.
Chief Executive Officer. Our Chief Executive Officer is ultimately responsible for our risk management. In that capacity,
our Chief Executive Officer establishes our risk management culture, and ensures that businesses operate in accordance
with our risk culture. Our Corporate Risk Officer reports to our Chief Executive Officer.
Senior Executive Officers. Senior executive officers are responsible for ensuring their respective business units operate
within established risk limits. They are also responsible for identifying risks, explicitly considering risk when developing
strategic plans, budgets and new products, and implementing appropriate risk controls when pursuing business strategies
and objectives. Senior executive officers also coordinate with Corporate Risk Management to produce relevant, sufficient,
accurate and timely risk reporting that is consistent with the processes and methodology established by Corporate Risk
Management. In addition, our senior executive officers are responsible for ensuring that sufficient financial resources and
qualified personnel are deployed to control the risks inherent in the business activity.
Corporate Risk Officer. Our Corporate Risk Officer chairs our Risk Committee and manages our Corporate Risk
Management function. Our Corporate Risk Officer is responsible for establishing and implementing standards for the
identification, management, measurement and reporting of risk on an enterprise-wide basis.
Law and Compliance Department. Our Law and Compliance Department is responsible for establishing and
maintaining a compliance program that includes our compliance risk identification, assessment, policy development,
monitoring, testing, training and reporting activities. Through collaboration with business units, our Law and Compliance
Department incorporates a commitment to compliance in our day-to-day activities. The head of Compliance reports to the
General Counsel.
Internal Audit Department. Our Internal Audit Department is responsible for performing periodic, independent reviews
and testing of compliance with our risk management policies and standards, performing assessments of the design and
operating effectiveness of these policies and standards, and validating that all risk management controls are functioning
as intended. The head of Internal Audit reports to the Audit and Risk Committee of our board of directors.
Risk Appetite and Strategic Limit Structure
Our risk appetite and strategic limit structure establish the amount of risk, on a broad level, that we are willing to
accept in pursuit of shareholder value. It reflects our risk management philosophy, and, in turn influences our culture and
operating style. Our determination of risk appetite and strategic limits is directly linked to the strategic planning process
and is consistent with our aspirations and mission statement. Risk appetite expressions and strategic limits are categorized
by risk type and cascade through our committees and business units and are incorporated into business decisions,
reporting and day-to-day business discussions.
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