it is really a very big topic, isn't it?
Let's figure it out step by step.
The Risk Committee is responsible for performing the duties to enable the Board to fulfill its oversight responsibilities in relation to the Group’s:
• identification, assessment and management of risk; and
• adherence to internal risk management policies and procedures
The Risk Committee will be appointed by the Board and shall comprise not less than three non-executive directors (unless otherwise determined by the Board).
The Committee shall regularly update the Board regarding Committee activities and make appropriate recommendations. The Risk Committee shall submit an annual report to the Board (at the Board meeting at which the year end financial statements are approved) summarising the Committee’s activities during the year.
The Risk Committee shall submit an annual Letter of Representation to the Audit Committee confirming that status of risk issues relevant to the annual Financial Statements.
The Risk Committee shall, at least annually review this Charter and its continuing adequacy together with an evaluation of the Committee’s performance and the extent to which the Committee has met the requirements of the BOD.
Specifically, reporting by the Risk Committee will include:
• an annual recommendation of any changes in the Charter to the Board;
• a self-assessment of the effectiveness of the Risk Committee at least annually;
• regular reports to the Board on the activities of the Risk Committee, at a minimum annually; and
• referral to the Audit Committee of any matters that have come to the attention of the Risk Committee that are relevant for the Audit Committee.
With respect to the identification, assessment and management of risk, the Committee shall across all risk categories:
• recommend the risk profile and risk appetite across the Group, for approval by the Board;
• receive reports from management concerning the Group’s Risk Management Strategies, in order to consider and, if thought fit, approve or vary them;
• approve and oversee the process developed by management to identify principal risks, evaluate their potential impact, and implement appropriate systems to manage such risks;
• approve principles, policies, strategies and processes for the management of risk including the establishment of other risk committees and the delegation of matters to those committees;
• approve or where appropriate make recommendations to the Board as to the exposure limits and risk-taking authority to be delegated by the Board, to the Group Managing Director & CEO and executive management;
• receive reports from management concerning the Group’s discretion frameworks, including absolute levels of discretion of the relevant executive management committees and executive management, in order to consider and, if thought fit, approve or vary them;
• receive reports from management concerning resolution of significant risk exposures and risk events, in order to monitor them and as appropriate, if thought fit, approve them.
With respect to specific categories of risk, review, from time to time, principles, policies, limits, standards, guidelines, management committee mandates and other significant procedures established by management. Categories of risk may include (but are not limited to) counterparty, regulatory compliance, market, operational, asset and liability, liquidity, and insurance risk, and matters related to significant new business and change management initiatives.
The Committee shall also:
• review issues raised by External Audit or Internal Audit that impact the risk management framework or the Group’s risk management;
• review and make recommendations to the Board on draft statutory statements covering governance and risk management issues in accordance with the requirements of regulators; and
• direct any special investigations deemed necessary and engage and consult independent experts where considered necessary or desirable to carry out its duties and rely on the advice of such experts.
Very complex?
Surely, it is.
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