ING Direct 2015 Annual Report Download - page 215

Contents
Who we are
Report of the
Management
Board
Corporate
Governance
Consolidated
annual accounts
Parent company
annual accounts
Other
information
Additional
information
Notes to the Consolidated annual accounts of ING Bank - continued
Non-Financial Risk Awareness
Promoting Integrity Programme
The Promoting Integrity Programme was started in 2010 and is an innovative programme consisting of e-learning modules on key
bank-wide topics and follow-up dialogue sessions in which managers discuss the issues raised with their teams. The programme is
sponsored by board members and senior managers and is created to ensure that every employee in every part of ING Bank
understands how their actions and behaviour can help earn and retain customer and stakeholder trust. The modules consist of several
case studies and real life examples which require staff to think about various aspects of the issue. Each module also includes a
statement from a senior manager. The topics covered in 2015 were:
• Everything Matters
The module focuses on various everyday risks, stressing that even small, often overlooked items can lead to larger issues. It
addresses topics such as clean desk, user access, information barriers, physical security, data tapping, conflicts of interest and
Foreign Account Tax Compliance Act (FATCA).
• Integrity Above All
This module takes a closer look at integrity, the ING Values and what is expected from every employee to create the right culture
to best service our customers and minimise risks. Real examples and dilemmas are used to ask staff to think about what they can
do to make a difference. It emphasises the importance of creating a strong risk culture by doing the right things, where risk
awareness is ingrained in everything we do.
Learning
Global education and awareness training in the form of e-learning modules was provided on topics such as Financial Economic Crime
(FEC), Anti-Bribery and Anti-Corruption, Anti-Competitive Conduct (Competition Law) and Fraud and Security. Furthermore, there were
end of year campaigns for anti-bribery and anti-corruption to strengthen awareness.
Classroom sessions were delivered on general non-financial risk awareness for all lines of defence. This included training in
introduction programmes for new staff and talent programmes. The international Training on Operational Risk was held for staff in ING
Bank worldwide who are new to the ORM function. Compliance Risk Management introduced a new advanced Compliance Officer
Training for senior compliance officers in ING Bank worldwide. Classroom trainings and workshops were held on Scenario Analysis in
both the Netherlands and Belgium as well as webinars at basic and advanced levels.
In addition, regular global calls and webcasts were organised on various subjects to provide advice and clarification to non-financial
risk staff and provide the opportunity to ask questions.
Business Risk
Business Risk for ING Bank has been defined as the exposure to value loss due to fluctuations in volumes/margins, expenses as well as
the impact of customer behaviour risk. It is the risk inherent to strategy decisions and internal efficiency. The calculation of business
risk capital is done by calculation of two components that are combined to one business risk figure via the variance-covariance
methodology:
1. Expense risk covers the risk that expenses will deviate from the expected expenses over the horizon of the relevant activities. This
risk primarily relates to the (in)flexibility to adjust expenses, when that is needed. Expense risk only concerns non-financial
expenses (e.g. staff and IT expenses); financial expenses are not in scope.
2. Customer behaviour risk relates to clients behaving differently than expected and the effect that this behaviour can have on
customer deposits and mortgage pre-payments. The customer behaviour risk is calculated by stressing the underlying
assumptions in the models for behavioural assets and liabilities.
Governance
The governance and management of Business Risk differs from the risk types that have been describes in the sections before. ING
Bank has not developed explicit risk appetite statement regarding business risk nor has it set-up a department that is responsible for
managing this risk. The main reason is that the underlying risk types (expense risk, volume-margin risk, and customer behaviour risk)
are mitigated and managed in a different way. Expense risk is monitored and managed via the financial performance of the bank and
the local units whereby the reported expense numbers are compared on a quarterly basis with the 2017 Ambition of having a
cost/income ratio between 50% and 53%. Deviations from this ambition are monitored as part of the financial projections that are
discussed continuously within different parts of the organisation. For customer behaviour risk, the management and monitoring of
this risk is part of the day-to-day business of the Balance Sheet Risk department. A more extensive explanation of the risk
management practices for customer behaviour risk, please refer to the ‘Market Risk in Banking Books’ section.
ING Bank Annual Report 2015 213