TD Bank 2014 Annual Report Download - page 74

TD BANK GROUP ANNUAL REPORT 2014 MANAGEMENT’S DISCUSSION AND ANALYSIS72
In addition, governance, risk, and oversight functions operate inde-
pendently from business segments supported by an organizational
structure that provides independent oversight and objective challenge.
Governance, risk, and oversight function heads, including the Chief
Risk Officer (CRO), have unfettered access to respective Board
Committees to raise risk, compliance, and other issues. Lastly, aware-
ness and communication of TD’s RAS and the ERF take place across
the organization through enterprise risk communication programs,
employee orientation and training, and participation in internal risk
management conferences. These activities further strengthen TD’s risk
culture by increasing the knowledge and understanding of the Bank’s
expectations for risk taking.
WHO MANAGES RISK
TD’s risk governance structure emphasizes and balances strong inde-
pendent oversight with clear ownership for risk control within each
business segment. Under the Bank’s approach to risk governance,
business segments are accountable for risks arising in their business
and are responsible for identifying, assessing and measuring the risks,
as well as designing and implementing mitigating controls. Business
segments also monitor and report on the ongoing effectiveness of
their controls to safeguard TD from exceeding its risk appetite.
The Bank’s risk governance model includes a senior management
committee structure that is designed to support transparent risk report-
ing and discussions. TD’s overall risk and control oversight is provided by
the Board and its committees (primarily the Audit and Risk Committees).
The CEO and SET determine the Bank’s long-term direction within
the Bank’s risk appetite and apply it to the business segments. Risk
Management, headed by the Group Head and CRO, recommends
enterprise risk strategy and policy and provides independent oversight
to support a comprehensive and proactive risk management approach.
The CRO, who is also a member of the SET, has unfettered access to
the Risk Committee. The Bank also employs a “three lines of defense”
model to describe the role of business segments (First Line), governance,
risk, and oversight functions, such as Risk Management, and Legal and
Regulatory Compliance functions (Second Line), and Internal Audit
(Third Line) in managing risk across TD.
Within the U.S. Retail business segment, additional risk and control
oversight is provided by a separate and distinct Board of Directors
which includes a fully independent Board Risk Committee and Board
Audit Committee. The U.S. Chief Risk Officer (U.S. CRO) has unfet-
tered access to the Board Risk Committee.
The following section provides an overview of the key roles and
responsibilities involved in risk management. The Bank’s risk governance
structure is illustrated in the following figure.
Chief Executive Officer
Senior Executive Team
Board of Directors
CRO
Audit Committee Risk Committee
Executive Committees
Asset/Liability & Capital
Committee (ALCO)
Operational Risk Oversight
Committee (OROC)
Disclosure
Committee
Enterprise Risk Management Committee (ERMC)
Reputational Risk
Committee (RRC)
Governance, Risk and Oversight Function
Business Segments
Canadian Retail U.S. Retail Wholesale Banking
Internal
Audit
Internal
Audit
RISK GOVERNANCE STRUCTURE