HSBC 2015 Annual Report Download - page 180

Report of the Directors: Risk (continued)
Operational risk
HSBC HOLDINGS PLC
178
Frequency of operational risk incidents by risk category
(individual loss ≥$10k)
Distribution of operational risk losses in US dollars by risk
category
Compliance risk
Compliance risk arises from activities subject to rules,
regulations, Group policies and other formal standards,
including those relating to AML, counter-terrorist and
proliferation financing, sanctions compliance, anti-bribery
and corruption, conduct of business and other regulations.
Anti-money laundering and sanctions
Revised global AML and sanctions policies were approved
in 2014. During 2015, global businesses and countries
introduced new AML and sanctions procedures arising
from the new policies and focused on embedding the
procedures required to effect these policies in our day
to day business operations globally. This supported our
ongoing effort to address the US DPA requirements. These
actions were in line with our strategic target to implement
the highest or most effective standards globally. The work
of the Monitor, who was appointed to assess the
effectiveness of our AML and sanctions compliance
programme is discussed on page 116 and our progress on
implementing Global Standards is detailed on page 21.
Anti-bribery and corruption
It is unethical, illegal, and contrary to good corporate
governance to bribe or corrupt others. The Group is
committed to preventing bribery and corruption, and to
consistently applying the letter and spirit of applicable
anti-bribery legislation in all markets and jurisdictions
in which we operate. We have implemented a strategic
programme to address bribery and corruption risks and
are embedding a new global suite of policies that make it
clear to all staff that Group members, employees or other
associated persons or entities must not engage in, or
otherwise facilitate, any form of bribery, whether direct
or indirect.
The anti-bribery and corruption programme, from training
to risk assessment, emphasises the importance of
consistent and standardised procedures to drive the
principles of ‘detect, deter and protect’ and ensure that
they are incorporated into every aspect of business-as-
usual activities.
Conduct of business
We recognise that delivering fair outcomes for our
customers and upholding financial market integrity is
critical to a sustainable business model. We have taken
a number of steps to raise our standards and deal with
historical incidents, including the following:
• we published a new Global Conduct Policy in 2015
(following the approval and implementation of the
global conduct approach and framework in 2014) for
the management of conduct designed to ensure that we
meet our strategic commitment to deliver fair outcomes
for our customers, and not disrupt the orderly and
transparent operation of financial markets;
• we launched communications programmes and global
mandatory training in respect of conduct and the
Group’s required values and behaviours;
• we enhanced the product governance process to further
ensure products are designed to meet customers’ needs
and are sold to suitable customer groupings. Post
implementation and regular reviews are undertaken
to help ensure products remain appropriate;
• we reviewed sales processes and sales incentive
schemes, focusing on activity and rewards linked
to values-based behaviour and good conduct;
• we enhanced our surveillance capabilities and tested
new technologies to strengthen our capabilities to
detect suspicious trading activity and misconduct;
• we undertook proactive reviews of our involvement in
the benchmarking processes for rates and commodities;
and
• we reviewed our insights into customer experience,
our analysis of the root cause of complaints and our
complaint handling to ensure we continually improve
and deliver better outcomes for our customers.
1%
0%
6%
38%
4%
22%
26%
2%
1%
0%
6%
39%
4%
23%
24%
2%
Accounting and Tax
Financial Crime Compliance
Regulatory Compliance
Fraud
Legal
Operations and Systems
People
Other
2015
2014
8%
2%
47%
4%
29%
9%
1%
0%
2%
0%
54%
6%
30%
7%
1%
0%
Accounting and Tax
Financial Crime Compliance
Regulatory Compliance
Fraud
Legal
Operations and Systems
People
Other
2015
2014