Huntington National Bank 2011 Annual Report Download - page 26

into this Annual Report on Form 10-K, information on those web sites is not part of this report. You also should
be able to inspect reports, proxy statements, and other information about us at the offices of the NASDAQ
National Market at 33 Whitehall Street, New York, New York.
Item 1A: Risk Factors
Risk Governance
We use a multi-faceted approach to risk governance. It begins with the board of directors defining our risk
appetite in aggregate as moderate-to-low. This does not preclude engagement in higher risk activities when we
have the demonstrated expertise and control mechanisms to selectively manage higher risk. Rather, the definition
is intended to represent a directional average of where we want our overall risk to be managed.
Two board committees oversee implementation of this desired risk profile: The Audit Committee and the
Risk Oversight Committee.
• The Audit Committee is principally involved with overseeing the integrity of financial statements,
providing oversight of the internal audit department, and selecting our external auditors. Our chief auditor
reports directly to the Audit Committee.
• The Risk Oversight Committee supervises our risk management processes which primarily cover credit,
market, liquidity, operational, and compliance risks. It also approves the charters of executive
management committees, sets risk limits on certain risk measures (e.g., economic value of equity),
receives results of the risk self-assessment process, and routinely engages management in dialogues
pertaining to key risk issues. Our credit review executive reports directly to the Risk Oversight
Committee.
Both committees are comprised of independent directors and routinely hold executive sessions with our key
officers engaged in accounting and risk management.
On a periodic basis, the two committees meet in joint session to cover matters relevant to both such as the
construct and appropriateness of the ACL, which is reviewed quarterly.
We maintain a philosophy that each colleague is responsible for risk. This is manifested by the design of a
risk management organization that places emphasis on risk-ownership by risk-takers. We believe that by placing
ownership of risk within its related business segment, attention to, and accountability for, risk is heightened.
Further, through its Compensation Committee, the board of directors seeks to ensure its system of rewards is
risk-sensitive and aligns the interests of management, creditors, and shareholders. We utilize a variety of
compensation-related tools to induce appropriate behavior, including common stock ownership thresholds for the
chief executive officer and certain members of senior management, a requirement to hold until retirement a
portion of net shares received upon exercise of stock options or release of restricted stock awards (50% for
executive officers and 25% for other aware recipients), equity deferrals, holdbacks, clawback provisions, and the
right to terminate compensation plans at any time when undesirable outcomes may result.
Management has introduced a number of steps to help ensure an aggregate moderate-to-low risk appetite is
maintained. Foremost is a quarterly, comprehensive self-assessment process in which each business segment
produces an analysis of its risks and the strength of its risk controls. The segment analyses are combined with
assessments by our risk management organization of major risk sectors (e.g., credit, market, operational,
reputational, compliance, etc.) to produce an overall enterprise risk assessment. Outcomes of the process include
a determination of the quality of the overall control process, the direction of risk, and our position compared to
the defined risk appetite.
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