TD Bank 2014 Annual Report Download - page 75

TD BANK GROUP ANNUAL REPORT 2014 MANAGEMENT’S DISCUSSION AND ANALYSIS 73
The Board of Directors
The Board oversees the Bank’s strategic direction, the implementation
of an effective risk management culture, and the internal control
framework across the enterprise. It accomplishes its risk management
mandate both directly and indirectly through its four committees,
primarily the Risk Committee and the Audit Committee, as well
as the Human Resources and Corporate Governance Committees.
On an annual basis, the Board reviews and approves TD’s RAS and
related measures to ensure ongoing relevance and alignment with
TD’s strategy.
The Risk Committee
The Risk Committee is responsible for reviewing and challenging
TD’s RAS prior to recommending it for approval by the Board annually.
The Risk Committee oversees the management of TD’s risk profile and
performance against its risk appetite. In support of this oversight, the
Committee reviews, challenges, and approves certain enterprise risk
management policies that support compliance with TD’s risk appetite,
and monitors the management of risks and risk trends via the quarterly
review of the risk dashboard.
The Audit Committee
The Audit Committee, in addition to overseeing financial reporting,
assesses the adequacy and effectiveness of internal controls, including
controls over relevant enterprise risk management processes and the
activities of the Bank’s Global Anti-Money Laundering (AML) and
Compliance groups. The Committee monitors compliance with policies
in respect of ethical personal and business conduct, including the
Bank’s Code of Conduct and Ethics.
The Human Resources Committee
The Human Resources Committee, in addition to its other responsibili-
ties, satisfies itself that Human Resources risks are appropriately
identified and assessed, measured, controlled, and monitored in a
manner consistent with the risk programs within the Bank, and with
the sustainable achievement of the Bank’s business objectives.
The Corporate Governance Committee
The Corporate Governance Committee, in addition to its other respon-
sibilities, develops, and where appropriate, recommends to the Board
a set of corporate governance principles, including a code of conduct
and ethics, aimed at fostering a healthy governance culture at TD.
Chief Executive Officer and Senior Executive Team
The CEO and the SET develop and recommend to the Board the Bank’s
long-term strategic plan and direction and also develop and recom-
mend for Board approval TD’s risk appetite. The SET manages enterprise
risk in accordance with TD’s risk appetite and considers the impact
of emerging risks on the Bank’s strategy. This accountability includes
identifying and reporting significant risks to the Risk Committee.
Executive Committees
The CEO, in consultation with the CRO, designates TD’s Executive
Committees, which are chaired by SET members. The committees meet
regularly to oversee governance, risk and control activities and to review
and monitor risk strategies and related risk activities and practices.
The ERMC, chaired by the CEO, oversees the management of major
enterprise governance, risk, and control activities and promotes an inte-
grated and effective risk culture. The following Executive Committees
have been established to manage specific major risks based on the
nature of the risk and related business activity:
• ALCO – chaired by the Group Head, Insurance, Credit Cards, and
Enterprise Strategy, ALCO oversees directly and through its standing
subcommittees (the Risk Capital Committee, Global Liquidity Forum
and Enterprise Investment Committee) the management of TD’s
non-trading market risk and each of its consolidated liquidity,
funding, investments, and capital positions.
• OROC – chaired by the CRO, OROC oversees the strategic assess-
ment of TD’s governance, control, and operational risk structure.
• Disclosure Committee – chaired by the Group Head, Finance,
Sourcing and Corporate Communications and Chief Financial
Officer, the Disclosure Committee ensures that appropriate controls
and procedures are in place and operating to permit timely, accu-
rate, balanced, and compliant disclosure to regulators, shareholders,
and the market.
• RRC – chaired by the CRO, RRC oversees that corporate and busi-
ness initiatives, as well as matters escalated under the Reputational
Risk Policy, with significant reputational risk profiles receive adequate
review for reputational risk implications prior to implementation.
Risk Management
The Risk Management function, headed by the CRO, provides inde-
pendent oversight of enterprise risk management, risk governance,
and control and is responsible for establishing risk management strat-
egy, frameworks, policies, and practices. Risk Management’s primary
objective is to support a comprehensive and proactive approach to risk
management that promotes a strong risk management culture. Risk
Management works with the business segments and other corporate
oversight functions to establish policies, standards, and limits that
align with TD’s risk appetite and monitors and reports on existing
and emerging risks and compliance with TD’s risk appetite. The CRO
is supported by a dedicated team of risk management professionals
organized to oversee risks arising from each of the Bank’s major
risk categories. There is an established process in place for the
identification and assessment of top and emerging risks. In addition,
the Bank has clear procedures governing when and how risk events
and issues are brought to the attention of senior management and
the Risk Committee.
Business Segments
Each business segment has a dedicated risk management function that
reports directly to a senior risk executive, who, in turn, reports to the
CRO. This structure supports an appropriate level of central oversight
while emphasizing accountability for risk within the business segment.
Business management is responsible for recommending the business-
level risk appetite and measures, which are reviewed and challenged
by Risk Management, endorsed by the ERMC and approved by the
CEO, to align with TD’s risk appetite and manage risk within approved
risk limits.
Internal Audit
TD’s internal audit function provides independent assurance to the
Board regarding the effectiveness of risk management, control, and
governance processes employed to ensure compliance with TD’s risk
appetite. Internal Audit reports on its evaluation to management and
the Board.
Compliance
The mandate of TD’s Compliance Department is to manage compli-
ance risk across the Bank to align with the policies established and
approved by the Audit and Risk Committees. The Compliance
Department is responsible for establishing risk-based programs and
standards to proactively manage known and emerging compliance
risk across TD. The Compliance Department provides independent
oversight and delivers operational control processes to comply with
applicable legislation and regulatory requirements.
Anti-Money Laundering
The Global AML group establishes a risk-based program with standards
to proactively manage known and emerging AML compliance risk across
the Bank. The AML group provides independent oversight and delivers
operational control processes to comply with the applicable legislation
and regulatory requirements. Business segments are accountable for
AML risk and are responsible for identifying and assessing the risk,
measuring, designing, and implementing mitigating controls, as well
as monitoring the risk.