Annual Financial Report - 24 of 56

RNS Number : 6279S

HSBC Holdings PLC

18 March 2016

 

Managing risk	101
Risk management framework	101
Governance and structure	102
Responsibilities	104
Processes	105
Risk factors	108
Risk governance			193
Risk appetite			194
Top and emerging risks	110
Externally driven	110
Internally driven	114
Areas of special interest	116
Financial crime compliance and regulatory compliance	116
The Monitor	116
Regulatory stress tests	116
Oil and gas prices	117
Metals and mining	117
Mainland China exposures	117
Credit risk	118		195
Liquidity and funding	154		204
Market risk	166		210
Operational risk	176		217
Compliance risk	178		217
Legal risk			218
Global security and fraud risk			218
Systems risk			219
Vendor risk management			219
Risk management of insurance operations	180		219
Other material risks	189
Reputational risk	189		224
Fiduciary risk	189		224
Pension risk	189		225
Sustainability risk	190		226
1   Appendix to Risk - risk policies and practices.

For details of HSBC's policies and practices regarding risk management and governance see the Appendix to Risk on page 193.

Managing risk

All of our activities involve, to varying degrees, the measurement, evaluation and management of risk or combinations of risks.

Our conservative risk profile

We maintain a conservative risk profile which encompasses the following:

Financial position

·   Strong capital position, defined by regulatory and internal capital ratios.

·   Liquidity and funding management for each operating entity, on a stand-alone basis.

Operating model

·   Returns generated in line with risk taken.

·   Sustainable and diversified earnings mix, delivering consistent returns for shareholders.

Business practice

·   Zero tolerance for knowingly engaging in any business, activity or association where foreseeable reputational risk or damage has not been considered and/or mitigated.

·   No appetite for deliberately or knowingly causing detriment to consumers arising from our products and services or incurring a breach of the letter or spirit of regulatory requirements.

·   No appetite for inappropriate market conduct by a member of staff or by any Group business.

Risk management framework

Managing risk effectively is fundamental to the delivery of our strategic priorities. In doing so, we employ a risk management framework at all levels of the organisation and across all risk types. It fosters the continuous monitoring of the risk environment and an integrated evaluation of risks and their interactions. It also ensures that we have a consistent approach to risk management across the Group.

Our enterprise risk management framework is underpinned by our risk culture and is reinforced by the HSBC Values and our Global Standards. These are instrumental in aligning the behaviours of individuals with the Group's attitude to assuming and managing risk and helping to ensure that our risk profile remains in line with our risk appetite.

Our enterprise risk management framework is set out overleaf.

 

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