Corporate And Risk Governance - Office Of The Comptroller .
Comptroller’s HandbookSafety and nt(M)Earnings(E)Liquidity(L)Sensitivity toMarket Risk(S)OtherActivities(O)Corporate and RiskGovernanceVersion 2.0, July 2019Office of theComptroller of the CurrencyWashington, DC 20219
Version 2.0ContentsContentsIntroduction .1Risks Associated With Corporate and Risk Governance . 3Strategic Risk . 4Reputation Risk. 4Compliance Risk . 4Operational Risk . 5Corporate Governance .6Board’s Role in Corporate Governance . 6Board Composition, Qualifications, and Selection . 7Leadership Structure of the Board . 9Outside Advisors and Advisory Directors . 9Board and Board Committee Meeting Minutes . 10Access to Senior Management and Staff . 11Director Orientation and Training . 12Board Compensation. 12Board Tenure . 13Board’s Responsibilities . 13Provide Oversight . 15Establish an Appropriate Corporate Culture . 15Comply With Fiduciary Duties and the Law . 17Select, Retain, and Oversee Management. 18Oversee Compensation and Benefits Arrangements. 21Maintain Appropriate Affiliate and Holding Company Relationships . 24Establish and Maintain an Appropriate Board Structure . 24Perform Board Self-Assessments . 25Oversee Financial Performance and Risk Reporting . 26Support Efforts to Serve Community Credit Needs . 28Individual Responsibilities of Directors . 28Attend and Participate in Board and Committee Meetings . 28Request and Review Meeting Materials . 29Make Decisions and Seek Explanations . 29Review and Approve Policies . 30Exercise Independent Judgment . 30Planning .32Strategic Planning . 32New Activities . 34Capital Planning . 35Operational Planning . 36Disaster Recovery and Business Continuity Planning . 36Information Technology and Information Security . 37Recovery Planning . 37Comptroller’s HandbookiCorporate and Risk Governance
Version 2.0ContentsRisk Governance .39Risk Culture . 40Risk Appetite . 40Risk Management System. 42Identify Risk. 44Measure Risk . 44Monitor Risk . 44Control Risk . 44Risk Assessment Process . 45Policies . 45Processes . 46Personnel . 46Control Systems . 47Quality Control . 48Quality Assurance . 48Compliance Management System. 48Bank Secrecy Act/Anti-Money Laundering Program. 50Audit Program . 51Management Information Systems . 52Third-Party Risk Management . 54Insurance . 54Insurance Record Keeping . 55Board and Management’s Roles in Risk Governance . 55Board’s Responsibilities . 55Management’s Responsibilities . 56Examination Procedures .58Scope . 58Board of Directors and Management . 60Conclusions . 89Internal Control Questionnaire . 91Verification Procedures . 96Appendixes.98Appendix A: Board of Directors Statutory and Regulatory Requirements . 98Appendix B: Regulations Requiring Board Approval for Policies and Programs. 101Appendix C: Common Board Committees . 106Appendix D: Common Types of Insurance . 111Appendix E: Glossary . 117Appendix F: Abbreviations . 119References .120Comptroller’s HandbookiiCorporate and Risk Governance
Version 2.0IntroductionIntroductionThe Office of the Comptroller of the Currency’s (OCC) Comptroller’s Handbook booklet,“Corporate and Risk Governance,” is prepared for use by OCC examiners in connection withtheir examination and supervision of national banks, federal savings associations, and federalbranches and agencies of foreign banking organizations (collectively, banks). Each bank isdifferent and may present specific issues. Accordingly, examiners should apply theinformation in this booklet consistent with each bank’s individual circumstances. When it isnecessary to distinguish between them, national banks 1 and federal savings associations(FSA) are referred to separately.The general principles and practices discussed in this booklet are important protectionsagainst overarching risks to banks. This booklet focuses on strategic, reputation, compliance, and operational risks as they relate togovernance.reinforces oversight of credit, liquidity, interest rate, and price risks.combines and updates existing national bank and FSA guidance covering the roles andresponsibilities of the board of directors and senior management as well as corporate andrisk governance activities and risk management practices.supplements other OCC and interagency guidance related to corporate and riskgovernance and risk management.Other booklets in the Comptroller’s Handbook provide detailed risk managementinformation according to subject.An effective corporate and risk governance framework is essential to maintaining the safeand sound operation of the bank and helping to promote public confidence in the financialsystem. A bank’s corporate and risk governance practices should be commensurate with thebank’s size, complexity, and risk profile. In accordance with the OCC’s risk-basedsupervision approach, examiners use the core assessment in the “Community BankSupervision,” “Federal Branches and Agencies Supervision,” or “Large Bank Supervision”booklets of the Comptroller’s Handbook when evaluating the governance of communitybanks, federal branches and agencies, and midsize and large banks, respectively. Expandedprocedures in this and other booklets of the Comptroller’s Handbook contain detailedguidance for examining activities or products that warrant review beyond the coreassessment.Corporate and risk governance structure and practices should keep pace with the bank’schanges in size, risk profile, and complexity. Larger or more complex banks should havemore sophisticated and formal board and management structures and practices.1Generally, references to “national banks” throughout this booklet also apply to federal branches andagencies of foreign banking organizations unless otherwise specified. Refer to the “Federal Branches andAgencies Supervision” booklet of the Comptroller’s Handbook for more information regarding applicability oflaws, regulations, and guidance to federal branches and agencies.Comptroller’s Handbook1Corporate and Risk Governance
Version 2.0IntroductionHeightened StandardsSpecific criteria for covered banks, subject to 12 CFR 30, appendix D, are noted in text boxes like this onethroughout this booklet. 12 CFR 30, appendix D.I.E.5, “Covered Bank,” describes banks subject to “OCCGuidelines Establishing Heightened Standards for Certain Large Insured National Banks, Insured FederalSavings Associations, and Insured Federal Branches” (heightened standards).The assignment of the “management” rating in CAMELS 2 under the Uniform FinancialInstitutions Rating System is based on an assessment of the capability of the board ofdirectors and management, in their respective roles, to identify, measure, monitor, andcontrol the risks of a bank’s activities. The rating reflects their ability to maintain the bank’ssafe, sound, and efficient operation in compliance with applicable laws and regulations. 3 The“management” rating reflects examiner assessments about the board and management’swillingness and ability to effectively address all aspects of governance, risk management,compliance, bank operations, and financial performance. Examiners also consider BankSecrecy Act (BSA)/anti-money laundering (AML) examination findings in a safety andsoundness context when assigning the management component rating. Serious deficiencies ina bank’s BSA/AML compliance program create a presumption that the bank’s managementcomponent rating will be adversely affected because its risk management practices are lessthan satisfactory.For purposes of this booklet, the term “board” refers to the board of directors unlessotherwise stated. The board is responsible for providing effective oversight over the bank.The term “senior management” refers to bank employees designated by the board asexecutives responsible for making key decisions and implementing the board’s vision. Seniormanagement may include, but is not limited to, the president, chief executive officer (CEO),chief financial officer, chief risk executive (CRE), 4 chief information officer (CIO),compliance officer, chief credit officer, chief audit executive (CAE), 5 and chief bankcounsel. Titles and positions vary depending on the bank’s structure, size, and complexity.Unless otherwise noted, the booklet uses the terms “CEO” and “president” to refer to theindividual2A bank’s composite rating under the Uniform Financial Institutions Rating System, or CAMELS, integratesratings from six component areas: capital adequacy, asset quality, management, earnings, liquidity, andsensitivity to market risk. Evaluations of the component areas take into consideration the bank’s size andsophistication, the nature and complexity of its activities, and its risk profile. Federal branches and agencies arerated using the ROCA rating system, which includes the following component areas: risk management,operational controls, compliance, and asset quality.3For more information about the management rating, refer to the “Bank Supervision Process” booklet of theComptroller’s Handbook.4A CRE is also commonly known as a chief risk officer.5A CAE is commonly known as a chief auditor.Comptroller’s Handbook2Corporate and Risk Governance
Version 2.0Introduction Risks Associated With Corporate and Risk Governanceappointed by the board to oversee the bank’s day-to-day activities. The term “management”refers to bank managers responsible for carrying out the bank’s day-to-day activities,including goals established by senior management.Corporate governance identifies the authorities and responsibilities of the board and seniormanagement, in their respective roles, to govern the bank’s operations and structure.Corporate governance involves the relationships among the bank’s board, management,shareholders, and other stakeholders. Corporate governance is essential to the safe and soundoperation of the bank. Corporate governance includes how the board and senior management,in their respective roles, set the bank’s strategy, objectives, and risk appetite.establish the bank’s risk governance framework.identify, measure, monitor, and control risks.supervise and manage the bank’s business.protect the interests of depositors, protect the interests of shareholders or members (in thecase of a mutual FSA), 6 and take into account the interests of other stakeholders.align corporate culture, activities, and behaviors with the expectation that the bank willoperate in a safe and sound manner, operate with integrity, and comply with applicablelaws and regulations.Risk governance is an important element of corporate governance. Risk governance appliesthe principles of sound corporate governance to the identification, measurement, monitoring,and controlling of risks to help ensure that risk-taking activities are in line with the bank’sstrategic objectives and risk appetite. Risk governance is the bank’s approach to riskmanagement and includes the policies, processes, personnel, and control systems that supportrisk-related decision making.Risks Associated With Corporate and Risk GovernanceFrom a supervisory perspective, risk is the potential that events will have an adverse effect ona bank’s current or projected financial condition 7 and resilience. 8 The OCC has defined eightcategories of risk for bank supervision purposes: credit, interest rate, liquidity, price,operational, compliance, strategic, and reputation. These categories are not mutuallyexclusive. Any product or service may expose a bank to multiple risks. Risks also may beinterdependent and may be positively or negatively correlated. Examiners should be aware ofand assess this interdependence. Examiners also should be alert to concentrations that cansignificantly elevate risk. Concentrations can accumulate within and across products,6Mutual FSAs do not have shareholders. Voting rights in a mutual FSA are held by members, who aredepositors (and also, in some cases, borrowers) of the association. In the context of mutual FSAs, references to“shareholders” in this booklet should be read to mean members.7Financial condition includes impacts from diminished capital and liquidity. Capital in this context includespotential impacts from losses, reduced earnings, and market value of equity.8Resilience recognizes the bank’s ability to withstand periods of stress.Comptroller’s Handbook3Corporate and Risk Governance
Version 2.0Introduction Risks Associated With Corporate and Risk Governancebusiness lines, geographic areas, countries, and legal entities. Refer to the “Bank SupervisionProcess” booklet of the Comptroller’s Handbook for an expanded discussion on bankingrisks and their definitions. Corporate and risk governance is the framework in which all risksare managed at a bank as well as the oversight of the framework. The primary risksassociated with corporate and risk governance are strategic, reputation, compliance, andoperational. These risks are discussed more fully in the following paragraphs.Strategic RiskStrategic risk is the risk to current or projected financial condition and resilience arising fromadverse business decisions, poor implementation of business decisions, or lack ofresponsiveness to changes in the banking industry and operating environment. The board andsenior management, collectively, are the key decision makers that drive the strategicdirection of the bank and establish governance principles. The absence of appropriategovernance in the bank’s decision-making process and implementation of decisions can havewide-ranging consequences. The consequences may include missed business opportunities,losses, failure to comply with laws and regulations resulting in civil money penalties (CMP),and unsafe or
An effective corporate and risk governance framework is essential to maintaining the safe and sound operation of the bank and helping to promote public confidence in the financial system. A bank’s corporate and risk governance practices should be commensurate with the bank’s size, complexity, and risk profile.
Corporate Governance, Management vs. Ownership, Majority vs Minority, Corporate Governance codes in major jurisdictions, Sarbanes Oxley Act, US Securities and Exchange Commission; OECD Principles of Corporate Governance; Developments in India, Corporate Governance in Indian Ethos, Corporate Governance – Contemporary Developments. 2.
The corporate governance of Ajinomoto Co., Inc. is described below. I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information 1. Basic Views Our basic philosophy concerning corporate governance is set out in "Chapter 2: Basic Approach" of the Ajinomoto Principle on Corporate Governance.
Corporate Governance What is Corporate Governance? There are many definitions. The CBN Code of Corporate Governance defines it as follows: Corporate governance refers to the processes and structures by which the business and affairs of an institution are directed and managed. In order to improve
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Corporate Governance Report . I. Basic Policies for Corporate Governance, Capital Structure, Corporate . OMRON Corporation . President and CEO : Yoshihito Yamada . Contact: Board of Directors Office . The Bank of Tokyo-Mitsubishi UFJ, Ltd. 7,712,695 : 3.54% . State Street Bank and Trust Company 505001 :
The Board is committed to maintaining high standards of corporate governance by overseeing a sound and effective governance framework for the management and conduct of Computershare’s business. This corporate governance statement sets out a description of Computershare’s main corporate governance practices.
80Report of the Remuneration Committee In compliance with the Financial Reporting Council's UK Corporate Governance Code, the company has prepared the Corporate Governance Report that follows. www.iairgroup.com57 Strategic report Corporate governance Financial statements Additional information Chairman's introduction to corporate governance
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