Enhanced Disclosure Task Force 2015 Progress Report Appendix 4: Leading Practice Examples of EDTF Recommendations. October 2015

Transcription

1 Enhanced Disclosure Task Force 2015 Progress Report Appendix 4: Leading Practice Examples of EDTF Recommendations October

2 Table of Contents Page 1 General recommendations 4 2 Risk governance and risk management strategies / business model 12 3 Capital adequacy and risk-weighted assets 21 4 Liquidity and funding 44 5 Market risk 58 6 Credit risk 67 7 Other risks 93 2

3 Index of disclosure examples by recommendation and source Sources of examples, by recommendation General recommendations Page 1. Barclays, Mizuho 5 2. UBS 7 3. HSBC, Santander 8 4. Citigroup, Barclays 10 Risk governance and risk management strategies / business model 5. Credit Suisse, BPCE Group Deutsche Bank, ING, Scotiabank CIBC, Lloyds RBS 20 Capital adequacy and risk-weighted assets 9. Handelsbanken, BBVA a) Commerzbank, Societe Generale b) BNP Paribas, Royal Bank of Canada 11. Citigroup, UBS Barclays RBS, Santander Deutsche Bank, Scotiabank HSBC, CIBC, Deutsche Bank, RBS Citigroup, HSBC ING, Societe Generale Sources of examples, by recommendation Liquidity and Funding Page 18. (a) Goldman Sachs, ING (b) TD, DBS (c) Deutsche Bank UBS, Deutsche Bank, National Bank of Canada BMO, Royal Bank of Canada UBS, Credit Suisse, HSBC 55 Market risk 22. HSBC, BMO ING Group, UBS Barclays, RBS Royal Bank of Canada 65 Credit risk 26. a) HSBC, RBS, Santander b) JP Morgan, Nordea c) JP Morgan, Deutsche Bank 27. Citigroup, Unicredit, MUFG BMO, Wells Fargo (a) ING, Standard Chartered (b) CIBC, Deutsche Bank, Morgan Stanley, RBS ING, Standard Chartered 90 Other risks 31. Commerzbank, Lloyds BNP Paribas, Standard Chartered, DBS Notes Risk disclosures are complex and presentation differs across institutions. Examples shown are meant to highlight leading practice and are not necessarily comprehensive or exclusive Examples shown are not exclusive. The EDTF Users Group has highlighted only a subset of the good disclosures available, selecting examples from a broad set of institutions across geographies Examples shown may be partial. The EDTF recommends that readers refer to banks annual reports and Pillar 3 documents to review complete disclosures 3

4 Section 1 General recommendations 4

5 Section 1 General recommendations Recommendation 1: Present all risk information together or provide an index to aid in navigation Barclays provides detailed cross references to risk disclosures in both its Annual Report and Pillar 3 documents, including an Index of Tables and a CRD IV reference for regulatory disclosures Source: Barclays 2014 Annual Report, p , 123; Pillar 3 p

6 Section 1 General recommendations Recommendation 1: Present all risk information together or provide an index to aid in navigation Mizuho and its Japanese peers (MUFG, Sumitomo) each maintain an online index which links to the most-recent risk reports for each risk category Source: Mizuho Financial Group website: 6

7 Section 1 General recommendations Recommendation 2: Define the bank s risk terminology and risk measures and present key parameter values used UBS provides an index to more-detailed disclosures of its risk terminology throughout the Annual Report. Page references within the PDF link directly to the associated pages of the report. Only the summary risk definitions and key parameters of the bank s credit risk models are shown here Source: UBS Annual Report 2014, pgs 170 7

8 Section 1 General recommendations Recommendation 3: Discuss top and emerging risks, including quantitative disclosure and recent changes HSBC clearly separates Top vs Emerging risks and outlines their potential impact on the company as well as mitigating actions. The list itself changed meaningfully between the 2013 and 2014 Annual Reports Source: HSBC 2014 Annual Report, pg

9 Section 1 General recommendations Recommendation 3: Discuss top and emerging risks, including quantitative disclosure and recent changes Source: Santander 2014 Annual Report, pg

10 Section 1 General recommendations Recommendation 4: Once the applicable rules are finalized, outline plans to meet each new key regulatory ratio, e.g. the net stable funding ratio, liquidity coverage ratio and leverage ratio Supplementary Leverage Ratio Liquidity Coverage Ratio To be considered leading practice, members of the User Group expect banks to disclose pro-forma ratios as well as the underlying components of the measures (e.g., leverage exposure, HQLA and net outflows, fully loaded risk weighed assets for Standardized / Advanced) Source: Citigroup 2014 Annual Report, pgs 51-52, 94, 99 10

11 Section 1 General recommendations Recommendation 4: Once the applicable rules are finalized, outline plans to meet each new key regulatory ratio, e.g. the net stable funding ratio, liquidity coverage ratio and leverage ratio Leverage Ratio Liquidity Coverage Ratio In addition to quantifying its leverage exposure and components of LCR, Barclays outlines its internal targets for these ratios over time Source: Barclays 2014 Annual Report, pgs 189, 192,

12 Section 2 Risk governance and risk management strategies / business model 12

13 Section 2 Risk governance and risk management strategies / business model Recommendation 5: Bank s risk management organisation, processes and key functions Source: Credit Suisse Group AG Annual Report 2014, pgs

14 Section 2 Risk governance and risk management strategies / business model Recommendation 5: Bank s risk management organisation, processes and key functions BPCE s report has a clear and comprehensive organization chart and good narrative discussion on risk management process, including the recent developments in Source: BPCE Registration Document and Full-Year Financial Report 2014, pgs 87,

15 Section 2 Risk governance and risk management strategies / business model Recommendation 6: Bank s risk culture, and how procedures and strategies are applied to support the culture Deutsche Bank describes its risk culture and quantifies its risk appetite. Members of the User Group noted that very few banks quantified their risk appetite to any meaningful degree Source: Deutsche Bank 2014 Annual Report, pgs

16 Section 2 Risk governance and risk management strategies / business model Recommendation 6: Bank s risk culture, and how procedures and strategies are applied to support the culture Source: Scotiabank 2014 Annual Report, pg. 65, 67 16

17 Section 2 Risk governance and risk management strategies / business model Recommendation 6: Bank s risk culture, and how procedures and strategies are applied to support the culture Source: ING 2014 Annual Report, pgs

18 Section 2 Risk governance and risk management strategies / business model Recommendation 7a: Describe key risks that arise from the bank s business model and activities Source: CIBC Annual Report 2014, pgs

19 Section 2 Risk governance and risk management strategies / business model Recommendation 7b: Describe the bank s risk appetite in the context of its business models and how the bank manages such risks Lloyds separately presents its Group risk appetite and the relationship of its appetite for other risk types to the Group risk appetite (credit, market, operational) Source: Lloyds Annual Report 2014, pg

20 Section 2 Risk governance and risk management strategies / business model Recommendation 8: Describe use of stress testing within the bank s risk governance and capital frameworks. Stress testing disclosures should provide a narrative overview of the bank s internal stress testing process and governance Source: RBS 2014 Annual Report, pgs

21 Section 3 Capital adequacy and risk-weighted assets 21

22 Section 3 Capital adequacy and risk-weighted assets Recommendation 9: Provide minimum Pillar 1 capital requirements Source: Handelsbanken 2014 Pillar 3, pgs

23 Section 3 Capital adequacy and risk-weighted assets Recommendation 9: Provide minimum Pillar 1 capital requirements Source: BBVA 2014 Pillar 3, pgs 4, 5, 27 23

24 Section 3 Capital adequacy and risk-weighted assets Recommendation 10a: Summarise information contained in the composition of capital templates adopted by the Basel Committee Source: Commerzbank 2014 Pillar 3 Report, pages

25 Section 3 Capital adequacy and risk-weighted assets Recommendation 10a: Summarise information contained in the composition of capital templates adopted by the Basel Committee Source: Societe Generale 2014 Annual Report, pg

26 Section 3 Capital adequacy and risk-weighted assets Recommendation 10b: Reconciliation of the accounting balance sheet to the regulatory balance sheet Source: BNP Paribas, 2014 Annual Report, pages

27 Section 3 Capital adequacy and risk-weighted assets Recommendation 10b: Reconciliation of the accounting balance sheet to the regulatory balance sheet Source: Royal Bank of Canada, Q Supplementary Financial Information, pgs

28 Section 3 Capital adequacy and risk-weighted assets Recommendation 11: Present a flow statement of movements since the prior reporting date in regulatory capital Citigroup provides flow statements by quarter and full year (YTD) for capital under current regulatory standards (Basel III Transition Arrangements) and Basel III (Full Implementation). Citigroup also reports credit, market and operational risk RWAs by primary business segments (Citicorp and Citi Holdings) under fully implemented Basel III rules, presenting both the Advanced Approach and the Standardized Approach. Source: Citi 2014 Annual Report, pg 42, 48, 49 28

29 Section 3 Capital adequacy and risk-weighted assets Recommendation 11: Present a flow statement of movements since the prior reporting date in regulatory capital Source: UBS 2014 Annual Report, pg

30 Section 3 Capital adequacy and risk-weighted assets Recommendation 12: Qualitatively and quantitatively discuss capital planning within a more general discussion of management s strategic planning Source: Barclays 2014 Annual Report, pgs

31 Section 3 Capital adequacy and risk-weighted assets Recommendation 13: Provide granular information to explain how risk-weighted assets (RWAs) relate to business activities and related risks Source: RBS 2014 Annual Report, pgs

32 Section 3 Capital adequacy and risk-weighted assets Recommendation 13: Provide granular information to explain how risk-weighted assets (RWAs) relate to business activities and related risks Source: Santander Pillar III Disclosures, pgs 35, 36 32

33 Section 3 Capital adequacy and risk-weighted assets Recommendation 14: Present a table showing the capital requirements for each method used to calculate the measurement in credit, market and operational risk Source: Deutsche Bank 2014 Financial Report, pg

34 Section 3 Capital adequacy and risk-weighted assets Recommendation 14: Present a table showing the capital requirements for each method used to calculate the measurement in credit, market and operational risk Source: Scotiabank Supplementary Regulatory Capital Disclosure Q4 2014, pg 12 34

35 Section 3 Capital adequacy and risk-weighted assets Recommendation 15a: Tabulate credit risk in the banking book showing average probability of default (PD) and LGD as well as exposure at default (EAD), total RWAs and RWA density for Basel asset classes and major portfolios within the Basel asset classes at a suitable level of granularity based on internal ratings grades Source: HSBC Pillar 3 pages 49, 50 and 57 35

36 Section 3 Capital adequacy and risk-weighted assets Recommendation 15a: Tabulate credit risk in the banking book showing average probability of default (PD) and LGD as well as exposure at default (EAD), total RWAs and RWA density for Basel asset classes and major portfolios within the Basel asset classes at a suitable level of granularity based on internal ratings grades Source: CIBC Supplementary Regulatory Capital Disclosure Page 13 36

37 Section 3 Capital adequacy and risk-weighted assets Recommendation 15b: For non-retail banking book credit portfolios, internal ratings grades and PD bands should be mapped against external credit ratings and the number of PD bands presented should match the number of notch-specific ratings used by credit rating agencies Source: Deutsche Bank Financial Report 2014, pg

38 Section 3 Capital adequacy and risk-weighted assets Recommendation 15b: For non-retail banking book credit portfolios, internal ratings grades and PD bands should be mapped against external credit ratings and the number of PD bands presented should match the number of notch-specific ratings used by credit rating agencies Source: RBS 2014 Pillar 3 Report, pgs

39 Section 3 Capital adequacy and risk-weighted assets Recommendation 16: RWA flow statement for each risk type (1 of 2) HSBC provides an RWA flow statement by region for IRB credit risk and commentary on key drivers for each of the main categories of RWA movement Source: HSBC 2014 Annual Report, pages

40 Section 3 Capital adequacy and risk-weighted assets Recommendation 16: RWA flow statement for each risk type (2 of 2) Source: HSBC 2014 Annual Report, pages

41 Section 3 Capital adequacy and risk-weighted assets Recommendation 16: RWA flow statement for each risk type Citigroup provides RWA flow statements by risk type under both the Basel III Advanced Transitional and Fully Loaded Approaches with footnotes describing specific change. Users find it particularly helpful that Citi provides quarterly changes in RWAs in addition to annual changes Source: Citigroup K, pgs 43, 50 41

42 Section 3 Capital adequacy and risk-weighted assets Recommendation 17: Put Basel Pillar 3 back-testing requirements into context, including assessment of model performance and validation against default and loss Source: ING 2014 Annual Report, pgs

43 Section 3 Capital adequacy and risk-weighted assets Recommendation 17: Put Basel Pillar 3 back-testing requirements into context, including assessment of model performance and validation against default and loss Societe Generale includes a similar set of tables for its Wholesale portfolios Source: Societe Generale 2014 Annual Report, pages ,

44 Section 4 Liquidity and Funding 44

45 Section 4 Liquidity and Funding Recommendation 18a: Describe how the bank manages its potential liquidity needs Source: Goldman Sachs 2014 Annual Report, pgs

46 Section 4 Liquidity and Funding Recommendation 18a: Describe how the bank manages its potential liquidity needs Source: ING Group 2014 Annual Report, pgs

47 Section 4 Liquidity and Funding Recommendation 18b: Provide a quantitative analysis of the components of the liquidity reserve held to meet these needs, ideally by providing averages as well as period-end balances Source: TD Bank Group 2014 Annual Report, pgs

48 Section 4 Liquidity and Funding Recommendation 18b: Provide a quantitative analysis of the components of the liquidity reserve held to meet these needs, ideally by providing averages as well as period-end balances Source: DBS Annual Report 2014, pgs

49 Section 4 Liquidity and Funding Recommendation 18c: Provide an explanation of possible limitations on the use of the liquidity reserve maintained in any material subsidiary or currency Deutsche Bank does not quantify the limitations of the use of the liquidity reserve by subsidiary or currency, but instead quantifies the freely transferable liquidity reserve. Also see National Bank of Canada s implementation of 19a (summary of encumbered and unencumbered assets) on the following page for an alternative implementation of this recommendation Source: Deutsche Bank 2014 Annual Report, pg

50 Section 4 Liquidity and Funding Recommendation 19: Summarise encumbered and unencumbered assets in a tabular format by balance sheet categories. Include collateral received that can be rehypothecated or otherwise redeployed Source: UBS 2014 Annual Report, pg

51 Section 4 Liquidity and Funding Recommendation 19: Summarise encumbered and unencumbered assets in a tabular format by balance sheet categories. Include collateral received that can be rehypothecated or otherwise redeployed Source: Deutsche Bank Annual Report page

52 Section 4 Liquidity and Funding Recommendation 19: Summarise encumbered and unencumbered assets in a tabular format by balance sheet categories. Include collateral received that can be rehypothecated or otherwise redeployed Source: National Bank of Canada 2014 Annual Report, pg 85 52

53 Section 4 Liquidity and Funding Recommendation 20: Consolidated total assets, liabilities and off-balance sheet commitments by remaining contractual maturity Source: BMO 2014 Annual Report, pgs

54 Section 4 Liquidity and Funding Recommendation 20: Consolidated total assets, liabilities and off-balance sheet commitments by remaining contractual maturity Source: RBC 2014 Annual Report, pgs

55 Section 4 Liquidity and Funding Recommendation 21: Bank s funding strategy, including key sources and any funding concentrations, to enable effective insight into available funding sources, reliance on wholesale funding, any geographical or currency risks and changes in those sources over time Source: UBS 2014 Annual Report, pgs

56 Section 4 Liquidity and Funding Recommendation 21: Bank s funding strategy, including key sources and any funding concentrations, to enable effective insight into available funding sources, reliance on wholesale funding, any geographical or currency risks and changes in those sources over time Source: Credit Suisse 2014 Annual Report, pgs

57 Section 4 Liquidity and Funding Recommendation 21: Bank s funding strategy, including key sources and any funding concentrations, to enable effective insight into available funding sources, reliance on wholesale funding, any geographical or currency risks and changes in those sources over time. Source: HSBC 2014 Annual Report, pgs

58 Section 5 Market risk 58

59 Section 5 Market risk Recommendation 22: Linkages between line items in the balance sheet and the income statement with positions included in the traded market risk disclosures Source: HSBC 2014 Annual Report, pgs

60 Section 5 Market risk Recommendation 22: Linkages between line items in the balance sheet and the income statement with positions included in the traded market risk disclosures Source: BMO 2014 Annual Report, pg 94 60

61 Section 5 Market risk Recommendation 23: Provide qualitative and quantitative breakdowns of significant trading and non-trading market risk factors that may be relevant to the bank s portfolio beyond interest rates, foreign exchange, commodity and equity measures Source: UBS 2014 Annual Report, pgs 208,

62 Section 5 Market risk Recommendation 23: Provide qualitative and quantitative breakdowns of significant trading and non-trading market risk factors that may be relevant to the bank s portfolio beyond interest rates, foreign exchange, commodity and equity measures Source: ING 2014 Annual Report, pg

63 Section 5 Market risk Recommendation 24: Provide qualitative and quantitative disclosures that describe significant market risk measurement model limitations, assumptions, validation procedures, use of proxies, changes in risk measures and models through time and descriptions of the reasons for back-testing exceptions Barclays Pillar 3 disclosure on market risk model limitations and back-testing exceptions is complemented by tables and charts showing the severity of those exceptions during the reporting period Source: Barclays 2014 Pillar 3, pgs

64 Section 5 Market risk Recommendation 24: Provide qualitative and quantitative disclosures that describe significant market risk measurement model limitations, assumptions, validation procedures, use of proxies, changes in risk measures and models through time and descriptions of the reasons for back-testing exceptions Source: RBS 2014 Annual Report, pgs

65 Section 5 Market risk Recommendation 25: Describe market risk management techniques beyond VaR, such as stress tests, etc. Source: Royal Bank of Canada 2014 Annual Report, pgs

66 Section 6 Credit risk 66

67 Section 6 Credit risk Recommendation 26a: Summarize credit risk profile, including significant credit risk concentrations including a quantitative summary of aggregate credit risk exposures that reconciles to the balance sheet (1 of 2) Source: HSBC 2014 Annual Report, pgs

68 Section 6 Credit risk Recommendation 26a: Summarize credit risk profile, including significant credit risk concentrations including a quantitative summary of aggregate credit risk exposures that reconciles to the balance sheet (2 of 2) HSBC provides a high level summary of its overall credit risk profile with clear linkages to more in-depth disclosures available elsewhere Source: HSBC 2014 Annual Report, pgs

69 Section 6 Credit risk Recommendation 26a: Summarize credit risk profile, including significant credit risk concentrations including a quantitative summary of aggregate credit risk exposures that reconciles to the balance sheet (1 of 3) RBS provides quantitative breakouts of major portfolios (Wholesale, CRE, Personal) along with detailed commentary on changes in risk exposure during the period Source: RBS 2014 Annual Report, pgs

70 Section 6 Credit risk Recommendation 26a: Summarize credit risk profile, including significant credit risk concentrations including a quantitative summary of aggregate credit risk exposures that reconciles to the balance sheet (2 of 3) Commercial Real Estate summary includes breakouts by segment, geography, sub-sector, LTV, credit quality and internal asset quality band Source: RBS 2014 Annual Report, pgs

71 Section 6 Credit risk Recommendation 26a: Summarize credit risk profile, including significant credit risk concentrations including a quantitative summary of aggregate credit risk exposures that reconciles to the balance sheet (3 of 3) RBS provides additional details on Oil & Gas exposure given its heightened relevance to investors following declines in oil prices in late 2014 Source: RBS 2014 Annual Report, pgs

72 Section 6 Credit risk Recommendation 26a: Summarize credit risk profile, including significant credit risk concentrations including a quantitative summary of aggregate credit risk exposures that reconciles to the balance sheet Source: Santander 2014 Annual Report, pgs

73 Section 6 Credit risk Recommendation 26b: Summarize credit risk profile, including detailed tables for both retail and corporate portfolios that segments them by relevant factors JP Morgan provides high level summary views of credit risk in its Consumer and Wholesale portfolios as shown above by product type, geography and industry as well as additional breakouts by underlying credit quality (e.g., LTV vs FICO for mortgages, FICO for credit cards, internal rating for corporate exposure) Source: JP Morgan Chase K, pgs 113,

74 Section 6 Credit risk Recommendation 26b: Summarize credit risk profile, including detailed tables for both retail and corporate portfolios that segments them by relevant factors Source: Nordea 2014 Pillar 3, pgs

75 Section 6 Credit risk Recommendation 26c: Credit risk likely to arise from off-balance sheet commitments by type JP Morgan breaks out lending commitments by line of business and maturity and provides a summary of provisions and reserves for lending commitments by major line of business Source: JP Morgan K, pgs 129, 202,

76 Section 6 Credit risk Recommendation 26c: Credit risk likely to arise from off-balance sheet commitments by type Deutsche Bank incorporates lending commitments and contingent liabilities within its consolidated credit risk tables with breakouts by credit quality, business division, geography, industry, etc. Source: Deutsche Bank 2014 Annual Report, pgs

77 Section 6 Credit risk Recommendation 27: Policies for identifying impaired or non-performing loans, including how the bank defines impaired or non-performing, restructured and returned-to-performing (cured) loans as well as explanations of loan forbearance policies (1 of 2) Source: Citigroup K, p. 144,

78 Section 6 Credit risk Recommendation 27: Policies for identifying impaired or non-performing loans, including how the bank defines impaired or non-performing, restructured and returned-to-performing (cured) loans as well as explanations of loan forbearance policies (2 of 2) Source: Citigroup K, pgs

79 Section 6 Credit risk Recommendation 27: Policies for identifying impaired or non-performing loans, including how the bank defines impaired or non-performing, restructured and returned-to-performing (cured) loans as well as explanations of loan forbearance policies (1 of 2) Source: UniCredit 2014 Pillar 3, pp

80 Section 6 Credit risk Recommendation 27: Policies for identifying impaired or non-performing loans, including how the bank defines impaired or non-performing, restructured and returned-to-performing (cured) loans as well as explanations of loan forbearance policies (2 of 2) Source: UniCredit 2014 Pillar 3, pp

81 Section 6 Credit risk Recommendation 27: Explanation of loan forbearance policies Source: MUFG 2014 Annual Report (English), pgs F-44, F-46, F-47 81

82 Section 6 Credit risk Recommendation 28a: Reconciliation of the opening and closing balances of non-performing or impaired loans in the period and the allowance for loan losses Source: BMO 2014 Annual Report, pgs 87-88,

83 Section 6 Credit risk Recommendation 28a: Reconciliation of the opening and closing balances of non-performing or impaired loans in the period and the allowance for loan losses Source: Wells Fargo Annual Report 2014, p. 75, 78,

84 Section 6 Credit risk Recommendation 28b: Explanation of the effects of loan acquisitions on ratio trends as well as qualitative and quantitative information about restructured loans ING provides notes that there were no significant acquisitions in 2014, but they do not quantify the impact that prior acquisitions have had on delinquency ratio trends Source: ING 2014 Annual Report, pgs

85 Section 6 Credit risk Recommendation 28b: Explanation of the effects of loan acquisitions on ratio trends as well as qualitative and quantitative information about restructured loans Source: Standard Chartered 2014 Annual Report, pg. 77,

86 Section 6 Credit risk Recommendation 29: Quantitative and qualitative analysis of the bank s counterparty credit risk that arises from its derivatives transactions CIBC provides more information than specifically requested in this recommendation by providing residual term to contractual maturity for derivatives Source: CIBC 2014 Annual Report, pgs

87 Section 6 Credit risk Recommendation 29: Quantitative and qualitative analysis of the bank s counterparty credit risk that arises from its derivatives transactions Source: Deutsche Bank 2014 Annual Report, pgs

88 Section 6 Credit risk Recommendation 29: Quantitative and qualitative analysis of the bank s counterparty credit risk that arises from its derivatives transactions Source: Morgan Stanley K, pgs ,

89 Section 6 Credit risk Recommendation 29: Quantitative and qualitative analysis of the bank s counterparty credit risk that arises from its derivatives transactions Source: RBS 2014 Annual Report, pgs. 257,

90 Section 6 Credit risk Recommendation 30: Provide qualitative information on credit risk mitigation, including collateral held for all sources of credit risk and quantitative information where meaningful (1 of 2) ING provides additional details on credit risk mitigation for consumer, business and capital markets lending by geography and by industry in a subsequent section. Consumer and Business lending are shown on the following page Source: ING 2014 Annual Report, pp , ( shown) 90

91 Section 6 Credit risk Recommendation 30: Provide qualitative information on credit risk mitigation, including collateral held for all sources of credit risk and quantitative information where meaningful (2 of 2) Source: ING 2014 Annual Report, pp

92 Section 6 Credit risk Recommendation 30: Provide qualitative information on credit risk mitigation, including collateral held for all sources of credit risk and quantitative information where meaningful Members of the User Group found this table to be a particularly useful measure of collateral quality for the securities portfolio Source: Standard Chartered 2014 Annual Report, pgs

93 Section 7 Other risks 93

94 Section 7 Other risks Recommendation 31: Describe other risk types based on management s classifications and discuss how each one is identified, governed, measured and managed Source: Commerzbank 2014 Annual Report, pages

95 Section 7 Other risks Recommendation 31: Describe other risk types based on management s classifications and discuss how each one is identified, governed, measured and managed Source: Lloyds 2014 Annual Report, Page 32-33, 136, ,

96 Section 7 Other risks Recommendation 32: Discuss risk events, including impact on businesses and bank response where material or potentially material loss events have occurred with focus on changes to risk processes BNP Paribas outlines the specific changes made in response to the comprehensive settlement with US authorities Source: BNP Paribas 2014 Annual Report, pgs

97 Section 7 Other risks Recommendation 32: Discuss risk events, including impact on businesses and bank response where material or potentially material loss events have occurred with focus on changes to risk processes Many institutions noted that they had not experienced significant operational risk loss events during the year and/or the largest incidents were contained within broader operational risk loss categories. In such cases, the User Group has recognized banks for quantifying overall operational risk loss experience and for providing information about operational risk management initiatives undertaken to reduce future losses. Standard Chartered and DBS are shown here Source: Standard Chartered 2014 Annual Report, pg 99 Source: DBS 2014 Annual Report 2014, pg