TD Bank 2009 Annual Report Download - page 71

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TD BANK FINANCIAL GROUP ANNUAL REPORT 2009 MANAGEMENT’S DISCUSSION AND ANALYSIS 67
RISK FACTORS AND MANAGEMENT
Managing Risk
EXECUTIVE SUMMARY
To grow profitably in financial services involves selectively taking and
managing risks. The challenge and our goal is to earn a stable and
sustainable rate of return for every dollar of risk we take, while contin-
ually investing in our businesses to meet our future growth objectives.
Our risk management resources and processes are designed to enable
all our businesses to understand the risks they are exposed to, and
develop the governance, control, and risk management framework
they need to manage them appropriately. These resources and
processes are strengthened by our culture which emphasizes trans-
parency and accountability for managing risk.
RISKS INVOLVED IN OUR BUSINESSES
We have created an Enterprise Risk Framework that sets out the major
risk categories and identifies and defines a broad number of risks
to which our businesses and operations could be exposed. These risk
categories are Strategic Risk, Credit Risk, Market Risk, Liquidity Risk,
Operational Risk, Insurance Risk, Regulatory & Legal Risk, and Reputa-
tional Risk. This Framework gives us an overall view of all potential
risks the Bank and individual businesses face and allows us to develop
appropriate management strategies.
WHO MANAGES RISK
Our risk governance structure emphasizes and balances strong central
oversight and control of risk with clear accountability for, and owner-
ship of, risk within each business unit. This structure supports the flow
of information between the business units, oversight functions, the
members of the Senior Executive Team (SET), representing every signif-
icant business segment and corporate oversight function, the Chief
Executive Officer (CEO), and the Board of Directors.
Board of Directors
•Provides oversight
Risk Committee of the Board
•Approves risk appetite and enterprise-
wide risk management policies that
establish the Bank’s risk tolerance
•Monitors management of risks
CEO & Senior Executive Team
•Support the development of TDBFG’s
long term strategic direction including
Enterprise Risk Appetite
• Identify and manage key risks to the
TDBFG Franchise
Executive Committees
(See chart below)
Risk Management
•Sets enterprise-level policies and standards that reflect the risk appetite
of the Bank
•Monitors and reports on enterprise-level risks
Business Units
•Responsible for owning and managing risk
•Sets business level risk appetite and manages risk within approved limits
Audit
•Provides independent
assurance on effectiveness
of risk management
Compliance
•Provides independent review
of Regulatory Risk
Executive Committees
Enterprise Risk Management Committee (ERMC)
Oversees the management of major enterprise governance, risk and control activities at TDBFG with a view to
understanding significant existing and emerging risks, and their impact on the Bank ’s risk profile and its earnings.
Chair - President & Chief Executive Officer
Enterprise Risk Framework
Strategic Risk Credit Risk Market Risk Liquidity Risk
Operational
Risk Insurance Risk
Regulatory &
Legal Risk
Reputational
Risk
Asset/Liability
Committee
Oversees the management
of TDBFG’s non-trading
market risk and each
of its consolidated
liquidity, funding and
capital positions.
Chair – EVP Corporate
Development
Risk Capital Assessment
Committee
Reviews the risk based
capital requirements in
light of the risks the Bank
takes within its stated risk
appetite and limits set
by Senior Management
and the Board.
Chair – Chief Risk Officer
Operational Risk
Oversight Committee
Provides oversight and
strategic assessment of
TDBFG’s governance,
control and operational
risk structure.
Chair – Chief Risk Officer
Disclosure Committee
Oversees that appropriate
controls and procedures
are in place to permit timely,
accurate, balanced and
compliant disclosure to
regulators, shareholders
and the market.
Chair – Chief
Financial Officer
Reputational Risk
Committee
Oversees that corporate
or business initiatives with
significant reputational
risk profiles have received
adequate review for
reputational risk implications.
Chair – Chief Risk Officer