ING Direct 2008 Annual Report Download - page 186

2.1 Consolidated annual accounts
The heads of these departments (Corporate Risk General Managers) report to the CRO and bear direct responsibility for risk (mitigating)
decisions at the Group level. The Corporate Risk General Managers and the CRO are responsible for the harmonisation and
standardisation of risk management practices.
In addition two staff departments report to the CRO:
The Risk Integration and Analytics department is responsible for inter-risk aggregation processes and for providing group-wide risk •
information to the CRO and Executive Board;
The Model Validation department reviews the performance of all material risk models applied within ING. This department carries •
out periodic model validations of all material risk models used by ING. To ensure independence from the business and the other risk
departments, the head of this department reports directly to the CRO.
The risk management function assists with the formulation of risk appetite, strategies, policies and limits. It also provides a review,
oversight and support function throughout the Group on risk related issues.
Group Risk Committees
The Group risk committees described below are also part of the second line of defence. They act within the overall risk policy and
delegated authorities granted by the Executive Board and have an advisory role to the CRO. To ensure a close link between the business
lines and the risk management function, the business line heads and the respective General Managers Corporate Risk are represented on
each committee (except for the ORRC were the business is not represented).
ING Group Credit Committee – Policy (GCCP): Discusses and approves policies, methodologies and procedures related to credit, •
country and reputation risks within ING Group. The GCCP meets on a monthly basis;
ING Group Credit Committee – Transaction Approval (GCCTA): Discusses and approves transactions which entail taking credit risk •
(including issuer investment risk). The GCCTA meets two times a week;
ING Group Investment Committee (GIC): Discusses and approves investment proposals for ING Real Estate. The GIC meets on a •
monthly basis;
Asset and Liability Committee ING Bank (ALCO Bank): Discusses and approves the overall risk profile of all ING Bank’s market risks that •
occur in its Wholesale Banking, Retail Banking and ING Direct activities. ALCO Bank defines the policy regarding funding, liquidity,
interest rate mismatch and solvency for ING Bank. ALCO Bank meets on a monthly basis;
Asset and Liability Committee ING Insurance (ALCO Insurance): Discusses and approves all risks associated with ING’s Insurance •
activities. This includes volatility (affecting earnings and value), exposure (required capital and market risk) and insurance risks. ALCO
Insurance meets six times a year;
Operational and Residual Risk Committee (ORRC): Discuss and approve issues related to Methods, Models and Parameters related to •
Operational risk, Business risk in Banking, inter-risk diversification and consistency across risk types and businesses. The committee
meets at least twice a year.
In addition, the Finance and Risk Committee (F&RC) is a platform for the CRO and the CFO, along with their respective direct reports,
to discuss and decide on issues that relate to both the finance and risk domains. F&RC meets every two weeks.
ING Group uses risk assessment and risk measurement to guide decision making. As a result, the quality of risk models is important.
The governance process for approval of risk models, methods and parameters ensures business and regulatory requirements, via a clear
assignment of responsibility and accountability.
Board level risk oversight
At the highest level of the ING organisation, there are board committees which oversee risk taking, and have ultimate approval authority.
ING Group has a two-tier board structure consisting of the Executive Board and the Supervisory Board; both tiers play an important role
in managing and monitoring the risk management framework.
The Executive Board is responsible for managing risks associated with the activities of ING Group. Its responsibilities include ensuring •
that internal risk management and control systems are effective and that ING Group complies with relevant legislation and regulations.
On a regular basis, the Executive Board reports on these issues and discusses the internal risk management and control systems with
the Supervisory Board. On a quarterly basis, the Executive Board reports on the Group’s risk profile versus its risk appetite to the Audit
Committee, explaining changes in the risk profile.
The Audit Committee is a sub-committee of the Supervisory Board. It assists the Supervisory Board in reviewing and assessing ING Group’s •
major risk exposures and the operation of internal risk management and control systems. Audit Committee membership is such that
specific business know-how and expertise relating to the activities of ING is available. The CRO attends the Audit Committee meetings.
The CRO makes sure that the board committees are well informed and understand ING Group’s risk position at all times. Every quarter
the CRO reports to the board committees on ING’s risk appetite levels and on ING Group’s risk profile. In addition the CRO briefs the
board committees on developments in internal and external risk related issues and makes sure the board committees understand specific
risk concepts.
Risk management (continued)
ING Group Annual Report 2008
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