JP Morgan Chase 2013 Annual Report Download - page 153

JPMorgan Chase & Co./2013 Annual Report 159
FIDUCIARY RISK MANAGEMENT
Fiduciary risk is the risk of failing to exercise the applicable
standard of loyalty and care, or to act in the best interests
of clients or to treat all clients fairly as required under
applicable law or regulation, potentially resulting in
regulatory action, reputational harm or financial liability.
Depending on the fiduciary activity and capacity in which
the Firm is acting, federal and state statutes, common law
and regulations require the Firm to adhere to specific duties
in which the Firm must always place the client’s interests
above its own.
Fiduciary risk governance
Fiduciary Risk Management is the responsibility of the
relevant LOB risk committees. Senior business, legal, risk
and compliance management, who have particular
responsibility for fiduciary issues, work with the relevant
LOB risk committees with the goal of ensuring that
businesses providing investment, trusts and estates, or
other fiduciary products or services that give rise to
fiduciary duties to clients, perform at the appropriate
standard relative to their fiduciary relationship with a client.
Each LOB and its respective risk and governance
committees are responsible for the oversight and
management of the fiduciary risks in their businesses. Of
particular focus are the policies and practices that address
a business’ responsibilities to a client, including
performance and service requirements and expectations;
client suitability determinations; and disclosure obligations
and communications. In this way, the relevant LOB risk
committees provide oversight of the Firm’s efforts to
monitor, measure and control the performance and risks
that may arise in the delivery of products or services to
clients that give rise to such fiduciary duties, as well as
those stemming from any of the Firm’s fiduciary
responsibilities under the Firm’s various employee benefit
plans.
During 2013 the Firm created the Firmwide Fiduciary Risk
Committee (“FFRC”). The FFRC provides a forum for
discussing the risks inherent in the Firm’s fiduciary
activities. The Committee is responsible for a cross-LOB
process to support the consistent identification, escalation
and reporting of fiduciary risk issues firmwide. Issues from
the FFRC may be escalated to the Firmwide Risk Committee.
REPUTATION RISK MANAGEMENT
Maintenance of the Firm’s reputation is the responsibility of
each individual employee of the Firm.The Firm’s Reputation
Risk policy explicitly vests each employee with the
responsibility to consider the reputation of the Firm, rather
than business benefits and regulatory requirements alone,
in deciding whether to pursue any new product, transaction,
client, or any other activity. Since the types of events that
could harm the Firm’s reputation are so varied across the
Firm’s lines of business, each line of business has a separate
reputation risk governance infrastructure in place, which
comprises three key elements: clear, documented escalation
criteria appropriate to the business footprint; a designated
primary discussion forum – in most cases, one or more
dedicated reputation risk committees; and a list of
designated contacts. Line of business reputation risk
governance is overseen by a Firmwide Reputation Risk
Governance function, which provides oversight of the
governance infrastructure and process to support the
consistent identification, escalation, management and
reporting of reputation risk issues firmwide.