JP Morgan Chase 2015 Annual Report Download - page 117

JPMorgan Chase & Co./2015 Annual Report 107
ENTERPRISE-WIDE RISK MANAGEMENT
Risk is an inherent part of JPMorgan Chase’s business
activities. When the Firm extends a consumer or wholesale
loan, advises customers on their investment decisions,
makes markets in securities, or offers other products or
services, the Firm takes on some degree of risk. The Firm’s
overall objective is to manage its businesses, and the
associated risks, in a manner that balances serving the
interests of its clients, customers and investors and protects
the safety and soundness of the Firm.
Firmwide Risk Management is overseen and managed on an
enterprise-wide basis. The Firm’s approach to risk
management covers a broad spectrum of risk areas, such as
credit, market, liquidity, model, structural interest rate,
principal, country, operational, compliance, legal, capital
and reputation risk, with controls and governance
established for each area, as appropriate.
The Firm believes that effective risk management requires:
• Acceptance of responsibility, including identification and
escalation of risk issues, by all individuals within the
Firm;
• Ownership of risk management within each of the lines
of business and corporate functions; and
• Firmwide structures for risk governance.
The Firm’s Operating Committee, which consists of the
Firm’s Chief Executive Officer (“CEO”), Chief Risk Officer
(“CRO”) and other senior executives, is responsible for
developing and executing the Firm’s risk management
framework. The framework is intended to provide controls
and ongoing management of key risks inherent in the Firm’s
business activities and create a culture of transparency,
awareness and personal responsibility through reporting,
collaboration, discussion, escalation and sharing of
information. The Operating Committee is responsible and
accountable to the Firm’s Board of Directors.
The Firm strives for continual improvement through
ongoing employee training and development, as well as
talent retention. The Firm follows a disciplined and
balanced compensation framework with strong internal
governance and independent Board oversight. The impact
of risk and control issues are carefully considered in the
Firm’s performance evaluation and incentive compensation
processes. The Firm is also engaged in a number of
activities focused on conduct risk and in regularly
evaluating its culture with respect to its business principles.