Terms Of Reference – Risk Committee

 

1. Composition of the committee

The Board Risk Committee is a sub-committee of the Board.  Each member of the Board is also a member of the Committee.  The Committee is chaired by one of the Board’s independent directors.  The Society’s Secretary and Solicitor, other members of the management team and external advisors (such as internal and external audit) may also attend meetings as appropriate.

2. Quorum

The quorum necessary for the transaction of business shall be three members.  A duly convened meeting of the Committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee.

3. Duties

The Committee is tasked with identifying the key risks facing the Society and determining their importance given their potential impact and likelihood of occurrence. The Committee will also ensure that the Society’s response to all identified key risks is appropriate.

More specifically, the Committee will:

i. Review and maintain the Society’s Statement of Risk Appetite (SRA).  Ensure that the statement adequately identifies all the key risks faced by the Society and that for those risks it also identifies appropriate management responses, policy and operating limits, stress tests, management information and management ownership.  The document will be reviewed at least annually and more frequently if dictated by market conditions.

ii. Review the Statement of Key Risk Indicators provided to the Committee by executive management.  The Committee is to be satisfied that all key risks are adequately reported on.  The Committee is to ensure that either the Society is remaining within its risk appetite in the various aspects of its business, or that management is taking appropriate mitigating actions where the risk appetite is being, or appears to be at risk of being, breached.

iii. Review and approve the Society’s Internal Capital Adequacy Assessment Process (ICAAP), ensuring the principal risks identified by the SRA are adequately considered.  The document will be reviewed at least annually and more frequently if dictated by market conditions.

iv. Review and approve the Society’s Capital Requirements Directive Pillar 3 disclosures.  The document will be reviewed at least annually and more frequently if dictated by market conditions.

v. Review and approve the Society’s Reverse Stress Test Framework prepared in accordance with the requirements of SYSC 20.  The document will be reviewed at least annually and more frequently if dictated by market conditions.

vi. Review and approve the Group Operational Risk policy statement.  The document will be reviewed at least annually and more frequently if dictated by market conditions.  This review will also consider whether the Society should maintain an independent risk governance structure.

vii. Review the Society’s Recovery and Resolution Plan and recommend its approval by the Board.

viii. Ensure the principal risks identified by the SRA are adequately considered within the Society’s internal audit programme.

ix. Be the reporting body for ALCO.  Consequently, hold responsibility for review and approval of all treasury related policy statements, including the Internal Liquidity Adequacy Assessment Process (ILAAP), Treasury Risk Policy Statement, Liquidity Contingency Plan, Contingency Funding Plan and Treasury Strategy Update.  Note that due to the timing of respective meetings, the regular update following each ALCO will be made to the Board rather than to the Board Risk Committee.ix. Maintain an oversight of conduct risk through review of the conduct risk papers provided to all Committee members as members of the Board, while recognising that management of this risk is primarily the responsibility of the Marketing and Development Committee.

x. Oversight of the Society’s conduct risk strategy ensuring that business proposals are aligned with its stated conduct risk appetite, ensuring risks to customers have been identified and appropriate actions are put in place to mitigate and monitor such risks.  Review and approval of the Conduct Risk Policy Statement.

xi. Recommend to the Remuneration Committee the detail of that part of the Finance Director’s job description relating to risk governance, or any amendments thereto.  If risk governance becomes an executive responsibility of any other executive director, the Committee will make similar recommendations to the Remuneration Committee concerning that individual’s job description.

4. Meetings

The Committee will meet at least four times per year and more frequently if considered necessary.  Minutes of each meeting will be taken and circulated to each member prior to the next meeting.  Meetings will normally coincide with the dates of Board meetings and a timetable of meetings for the coming 12 months will be published annually.

5. Committee effectiveness

The Committee will review its effectiveness on an annual basis.

MAY 2016