JP Morgan Chase 2015 Annual Report Download - page 159

JPMorgan Chase & Co./2015 Annual Report 149
CAPITAL MANAGEMENT
Capital risk is the risk the Firm has an insufficient level and
composition of capital to support the Firm’s business
activities and associated risks during normal economic
environments and stressed conditions.
A strong capital position is essential to the Firm’s business
strategy and competitive position. The Firm’s capital
strategy focuses on long-term stability, which enables the
Firm to build and invest in market-leading businesses, even
in a highly stressed environment. Prior to making any
decisions on future business activities, senior management
considers the implications on the Firm’s capital. In addition
to considering the Firm’s earnings outlook, senior
management evaluates all sources and uses of capital with
a view to preserving the Firm’s capital strength. Maintaining
a strong balance sheet to manage through economic
volatility is considered a strategic imperative by the Firm’s
Board of Directors, CEO and Operating Committee. The
Firm’s balance sheet philosophy focuses on risk-adjusted
returns, strong capital and reserves, and robust liquidity.
The Firm’s capital management objectives are to hold
capital sufficient to:
• Cover all material risks underlying the Firm’s business
activities;
• Maintain “well-capitalized” status and meet regulatory
capital requirements;
• Retain flexibility to take advantage of future investment
opportunities;
• Maintain sufficient capital in order to continue to build
and invest in its businesses through the cycle and in
stressed environments; and
• Distribute excess capital to shareholders while balancing
the other objectives stated above.
These objectives are achieved through ongoing monitoring
and management of the Firm’s capital position, regular
stress testing, and a capital governance framework. Capital
management is intended to be flexible in order to react to a
range of potential events. JPMorgan Chase has firmwide and
LOB processes for ongoing monitoring and active
management of its capital position.