JP Morgan Chase 2014 Annual Report Download - page 147

JPMorgan Chase & Co./2014 Annual Report 145
FIDUCIARY RISK MANAGEMENT
Fiduciary risk is the risk of a failure to exercise the
applicable high standard of care, to act in the best interests
of clients or to treat clients fairly, as required under
applicable law or regulation.
Depending on the fiduciary activity and capacity in which
the Firm is acting, federal and state statutes and
regulations, and common law 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 and/or other governance committees.
Senior business, legal, risk and compliance managers, who
have particular responsibility for fiduciary matters, 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/or other 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’s 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 and/
or other governance committees provide oversight of the
Firm’s efforts to monitor, measure and control the
performance and delivery of the products or services to
clients that may give rise to such fiduciary duties, as well as
the Firm’s fiduciary responsibilities with respect to the
Firm’s employee benefit plans.
The Firmwide Fiduciary Risk Committee (“FFRC”) is a forum
for risk matters related to the Firm’s fiduciary activities and
oversees the firmwide fiduciary risk governance framework.
It supports the consistent identification and escalation of
fiduciary risk matters by the relevant lines of business or
corporate functions responsible for managing fiduciary
activities. The committee escalates significant issues to the
Firmwide Risk Committee and any other committee
considered appropriate.
REPUTATION RISK MANAGEMENT
Reputation risk is the risk that an action, transaction,
investment or event will reduce the trust that clients,
shareholders, employees or the broader public has in the
Firm’s integrity or competence. Maintaining 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 when engaging in any 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.