TERMS OF REFERENCE DLC Board Risk Capital Committee Overview Investec Limited (listed on the JSE) and Investec plc (with a primary listing on the LSE and a secondary listing on the JSE), together with their subsidiaries, operate as a Dual Listed Company ( DLC ) structure ( the Group ) and is managed as a single economic enterprise. In terms of the DLC arrangements, the Boards of Investec plc and Investec Limited ( the Board ) are identical and the Group is managed as a unified economic enterprise, with a unified governance structure. The Board has delegated risk management oversight of the Group to the Board Risk and Capital Committee (BRCC). This is the most senior Risk Management Committee of the Group and comprises both executive and non-executive membership. It covers each material banking, wealth management and asset management subsidiary company within the wider Group. A current corporate structure is shown under Appendix 1 The BRCC has to ensure all risks are identified and properly mitigated and managed. Good customer and market conduct is paramount in all the Group does and the BRCC ensures a robust culture supported by oversight and management information to evidence good practice The BRCC is also the appointed Board Committee to meet the requirements of the SA Banks Act 94 of 1990, the Capital Requirements Regulation and Directive (CRR/ CRD IV), adopted by the European Commission and implemented by the UK. This requires the Board of Directors of a bank and a holding company to appoint a risk and capital management committee Membership BRCC members and its Chairman shall be appointed by the Board BRCC members may be removed or replaced by the Board at any time Membership will automatically end at such time as a member ceases to be in the employment of the Group or a member of the Board BRCC members shall be identified in the Investec Annual Report, Other individuals may be invited to attend all or part of a meeting as and when appropriate or when their expertise is required, but shall not have a vote Composition BRCC will be chaired by David Friedland. The alternate chairperson will be a non-executive member, Peter Thomas Permanent members are listed in Appendix 2 attached hereto Quorum A quorum, including the Chairman of the meeting, shall be five members (of whom at least three must be non-executive directors), all who must be present throughout the meeting In the absence of this quorum, if three members are available, including the Chairman of the meeting, and of the members present at least two must be non-executive directors, the meeting may proceed but the minutes must be ratified by the number of directors required to complete the full quorum
Notice of meetings BRCC meetings will be called by the Secretary at the request of any of its members Unless otherwise agreed, notice of each meeting confirming the venue, time and date together with an agenda of the items to be discussed, shall be forwarded to each BRCC member and any other person required to attend, no later than 2 working days before the date of the meeting Frequency Meetings of the BRCC shall be held every Friday prior to the Investec Ltd and Investec plc board meeting, unless otherwise agreed Meetings may also be held whenever required on an ad hoc basis Meetings The BRCC receives a number of pre agreed, pre requested standard reports from the independent control functions to enable it to discharge its responsibilities. These are both risk based and customer orientated Additionally it will request and receive separate one off reports on individual topics as required The BRCC additionally requests the control functions to attend in person It will ensure that the governance structure for control functions their reporting and the information in respect of customer conduct is regularly reviewed to ensure it remains current and vital Voting The Chairman may decide if a matter has been approved based on the consensus discussion, provided that should any member or Chairman request it, the matter shall then be put to a vote and a motion shall be passed by a simple majority of votes cast in favour thereof by members present and eligible to vote. There shall be no casting vote. The Secretary may call for approval of a matter via electronic communication and such approval would be deemed to have been received when the Secretary has received an electronic communication (e-mail) from at least 5 (five) BRCC members, confirming their approval of the matter. Members who are only representatives of Investec Bank Limited and Investec Limited shall not have a voting right in terms of Investec Bank plc or Investec plc specific matters. Secretary One of the Group s Company Secretaries or their nominee shall act as Secretary of the BRCC. Minutes of meetings The Secretary shall minute the proceedings and resolutions of all BRCC meetings, which shall be circulated promptly to: all BRCC members and other BRCC meeting attendees as appropriate members of the Board, DLC Capital Committee, Investec Limited Audit Committee or the Investec Plc Audit Committee when so requested Reporting responsibilities The BRCC shall report to the Board on its proceedings after each meeting on all matters within its duties and responsibilities and make recommendations it deems appropriate.
Mandate and specific duties The purpose of the BRCC with the assistance of the subject matter experts is to ensure all material risks wherever they occur throughout the Group are prudently identified and managed. It also strives to ensure there is good conduct in all interactions with customers and regulatory market standards are achieved. Classification of material risks are listed below these may change as business model or market needs dictate. The fair treatment of customers is at the heart of all the Group does and it is seen as a reputational and regulatory risk not to perform in a moral and ethical manner Material risks are stated as: - capital management - liquidity risk - credit risk - market risk - operational risk - IT risk including cybercrimes - legal risk - recovery and resolution plans - business continuity planning - financial risk including Tax matters - regulatory risk - reputational risk - economic risk - compliance risk - concentration risk - counterparty risk - conduct risk - equity risk arising from positions held in the bank s banking book - risk relating to procyclicality - solvency risk - translation risk - any other risks as regarded material by the bank - any other significant risks / issues that may arise from time to time Duties: Members are to review and where necessary challenge the information received Ensure it is appropriate to discharge their responsibilities ensuring risks are properly reported, prudently managed and within risk appetite Question the forward looking view of the risks that the Group is exposed to Ensure the customer focussed information is adequate to ensure good conduct The BRCC is empowered to approve and ratify Group Risk Management, Compliance and Customer Conduct Policies as it deems necessary. After due process it will approve and ratify all policies and terms of reference as recommended by ERRF The BRCC will give feedback and escalate any items to the DLC board and as necessary to the individual entity boards Furthermore the duties of the BRCC shall be to assist the Board - in its evaluation of the adequacy and efficiency of the risk policies, procedures, practices and controls applied within the Group in the day-to-day management of its business - in the identification of the build-up of and concentration of the various risks to which the Group is exposed - in developing a risk mitigation strategy to ensure that the Group manages the risks in an optimal manner
- in ensuring that a formal risk assessment is undertaken at least annually - in identifying and regularly monitoring all key risks and key performance indicators to ensure that its decision-making capability and accuracy of its reporting is maintained at a high level - to facilitate and promote communication, through reporting structures, regarding the matters referred to in paragraph (a) or any other related matter, between the Board and the executive officers of the Group - to establish an independent group risk management function, the head of which shall act as the reference point for all aspects relating to risk management within the Group, including the responsibility to arrange training of members of the Board in the different risk areas to which the Group is exposed - to introduce such measures as may serve to enhance the adequacy and efficiency of the risk management policies, procedures, practices and controls applied within the Group - to co-ordinate the monitoring of risk management on a globalised basis - to establish and implement a process of internal controls and reviews to ensure the integrity of the overall risk and capital management process - to establish and implement policies and procedures designed to ensure that the Group identifies, measures and reports all material risks - to establish and implement a process that relates capital to the level of risk - to establish and implement a process that states capital adequacy goals with respect to risk, taking account of the Group's strategic focus and business plan; and - to perform such further functions as may be prescribed Policies and process The Group and at relevant entity or business unit as appropriate has a suite of policies articulating its Risk appetite, including good customer conduct covering all its material risks. Responsibility for these policies is apportioned to a nominated individual Each policy has a clearly defined approval process and with an individual responsible for each. Regular management information is produced as granular as necessary to manage and mitigate all risks and ensure they run within a corridor of stated risk appetite The Group has a number of independent control functions and an independent Internal Audit function which reports to a non-executive Chairman The main independent control functions are Finance, Risk Management and Regulatory Compliance The Group operates a three lines of defence model with front office people seen as the first line of defence in all they do. The second line of defence is Risk Management and Regulatory Compliance. The third is Internal Audit and the appointed external Auditors Review of Terms of reference The BRCC will review the Terms of Reference bi-annually Scope of duties The foregoing list of specific duties and reporting responsibilities is not intended to be either complete or exclusive, and the BRCC shall, in addition, have such powers as may be necessary or appropriate for the performance of its duties in terms of these terms of reference. All interpretations and determinations of the BRCC made in accordance with the authority granted to it herein shall be binding on all interested parties. Authority The Board authorises the BRCC: to perform each of the specific duties and undertake each of the reporting responsibilities contained in these terms of reference and have the power to delegate authority to sub-committees or individuals, as it deems appropriate
to investigate any matter within its terms of reference and seek any information it requires from any employee (all employees being directed to co-operate with any such request by the BRCC) Interface with Audit Committee The Audit Committee has the primary role in providing assurance to the Board that enterprise wide risks have been correctly identified and appropriate controls are in place. Therefore, the Audit Committee will rely on the output of the BRCC to give assurance as regards enterprise wide risk.
Appendix 1: Main operating Structures Investec DLC structure and main operating subsidiaries as at 31 December 2014
Appendix 2 List of Permanent Members D Friedland (Chairman) S Koseff SE Abrahams (representative of Investec Bank Limited only) GR Burger H Fukuda B Kantor PRS Thomas F Titi ZBM Bassa KL Shuenyane