HSBC 2012 Annual Report Download - page 125

123
Overview Operating & Financial Review Corporate Governance Financial Statements Shareholder Information
Risk
Page App1
Risk profile2 .................................................... 123
Risk governance .............................................. 252
Managing risk2 ............................................... 124
Risks faced by HSBC ...................................... 124
Risk culture ...................................................... 124
Risk governance and ownership ...................... 124
Risk profile ...................................................... 126
Risk appetite .................................................... 126
Stress testing .................................................... 127
Areas of special interest ................................ 128
Compliance ...................................................... 128
Commercial real estate .................................... 128
Eurozone crisis ................................................. 129
Personal lending – US lending ......................... 130
Top and emerging risks2 ............................... 130
Macroeconomic and geopolitical risk ............. 131
Macro-prudential, regulatory and legal risks
to our business model .................................. 132
Risks related to our business operations,
governance and internal control systems .... 134
Credit risk4 ..................................................... 137 252
Eurozone exposures4 ...................................... 192
Liquidity and funding3 .................................. 203 261
Market risk4 .................................................... 217 265
Operational risk2 ............................................ 227 270
Compliance risk ............................................... 230 271
Fiduciary risk ................................................... 231 273
Risk management of insurance operations3 232 273
Other material risks2 ..................................... 246
Reputational risk .............................................. 246 278
Pension risk ...................................................... 246 278
Sustainability risk ............................................ 249 280
1 Appendix to Risk – risk policies and practices.
2 Unaudited. 3 Audited. 4 Audited where indicated.
For details of HSBC’s policies and practices
regarding risk management and governance
see the Appendix to Risk on page 252.
Risk profile
(Unaudited)
Managing our risk profile
• A strong balance sheet remains core to our
philosophy.
• Our portfolios remain aligned to our risk appetite
and strategy.
• Our risk management framework is supported by
strong forward-looking risk identification.
Maintaining capital strength and
strong liquidity position
• Our core tier 1 capital ratio remains strong at
12.3%.
• We have sustained our strong liquidity position
throughout 2012.
• Our ratio of customer advances to deposits
remains below 90%.
Strong governance
• Robust risk governance and accountability is
embedded across the Group.
• The Board, advised by the Group Risk
Committee, approves our risk appetite.
• The compliance control function is being
restructured and expanded to improve focus on
financial crime and regulatory compliance.
• Our global risk operating model supports
adherence to globally consistent standards and
risk management policies across the Group.
Our top and emerging risks
• Macroeconomic and geopolitical risk.
• Macro-prudential, regulatory and legal risk to our
business model.
• Risks related to our business operations,
governance and internal control systems.