HSBC 2015 Annual Report Download - page 103

HSBC HOLDINGS PLC
101
Strategic Report Financial Review Corporate Governance Financial Statements Shareholder Information
Risk Page App1
Managing risk 101
Risk management framework 101
Governance and structure 102
Responsibilities 104
Processes 105
Risk factors 108
Risk governance 193
Risk appetite 194
Top and emerging risks 110
Externally driven 110
Internally driven 114
Areas of special interest 116
Financial crime compliance and regulatory
compliance 116
The Monitor 116
Regulatory stress tests 116
Oil and gas prices 117
Metals and mining 117
Mainland China exposures 117
Credit risk 118 195
Liquidity and funding 154 204
Market risk 166 210
Operational risk 176 217
Compliance risk 178 217
Legal risk 218
Global security and fraud risk 218
Systems risk 219
Vendor risk management 219
Risk management of insurance operations 180 219
Other material risks 189
Reputational risk 189 224
Fiduciary risk 189 224
Pension risk 189 225
Sustainability risk 190 226
1 Appendix to Risk – risk policies and practices.
For details of HSBC’s policies and practices regarding risk
management and governance see the Appendix to Risk on
page 193.
Managing risk
All of our activities involve, to varying degrees, the
measurement, evaluation and management of risk
or combinations of risks.
Our conservative risk profile
We maintain a conservative risk pro fi le which
encompasses the
f ollo w ing:
Financial position
• Strong capital position, defined by regulatory and
internal capital ratios.
• Liquidity and funding management for each operating
entity, on a stand-alone basis.
Operating m odel
• Returns generated in line with risk taken.
• Sustainable and diversified earnings mix, delivering
consistent returns for shareholders.
Business practice
• Zero tolerance for knowingly engaging in any business,
activity or association where foreseeable reputational
risk or damage has not been considered and/or
mitigated.
• No appetite for deliberately or knowingly causing
detriment to consumers arising from our products and
services or incurring a breach of the letter or spirit of
regulatory requirements.
• No appetite for inappropriate market conduct by a
member of staff or by any Group business.
Risk management framework
Managing risk effectively is fundamental to the delivery
of our strategic priorities. In doing so, we employ a risk
management framework at all levels of the organisation and
across all risk types. It fosters the continuous monitoring of
the risk environment and an integrated evaluation of risks
and their interactions. It also ensures that we have a
consistent approach to risk management across the Group.
Our enterprise risk management framework is
underpinned by our risk culture and is reinforced by
the HSBC Values and our Global Standards. These are
instrumental in aligning the behaviours of individuals with
the Group’s attitude to assuming and managing risk and
helping to ensure that our risk profile remains in line with
our risk appetite.
Our enterprise risk management framework is set out
overleaf.