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C » Topics » RISK MANAGEMENT

These excerpts taken from the C 10-K filed Feb 27, 2009.

RISK MANAGEMENT

The Company believes that effective risk management is of primary importance to its success. Accordingly, the Company has a comprehensive risk management process to monitor, evaluate and manage the principal risks it assumes in conducting its activities. These risks include credit, market liquidity and operational, including legal and reputational exposures.

Citigroup’s risk management framework is designed to balance corporate oversight with well-defined independent risk management functions.

Enhancements were made to the risk management framework throughout 2008 based on guiding principles established by the Chief Risk Officer:

 

•  

a common Risk Capital model to evaluate risks;

•  

a defined risk appetite, aligned with business strategy;

•  

accountability through a common framework to manage risks;

•  

risk decisions based on transparent, accurate and rigorous analytics;

•  

expertise, stature, authority and independence of Risk Managers; and

•  

empowering Risk Managers to make decisions and escalate issues.

Significant focus has been placed on fostering a risk culture based on a policy of “Taking Intelligent Risk with Shared Responsibility, without forsaking Individual Accountability.”

 

•  

“Taking intelligent risk” means that Citi must carefully identify, measure and aggregate risks, and must fully understand downside risks.

•  

“Shared responsibility” means that individuals own and influence business outcomes, including risk controls.

•  

“Individual accountability” means individuals held ourselves accountable to actively manage risk.

The Chief Risk Officer, working closely with the Citi CEO, established management committees, Citi’s Audit and Risk Management Committee and Citi’s Board of Directors, is responsible for:

 

•  

establishing core standards for the management, measurement and reporting of risk;

•  

identifying, assessing, communicating and monitoring risks on a company-wide basis;

•  

engaging with senior management and the Board of Directors on a frequent basis on material matters with respect to risk-taking activities in the businesses and related risk management processes; and

•  

ensuring that the risk function has adequate independence, authority, expertise, staffing, technology and resources.

Changes were made to the risk management organization in 2008 to facilitate the management of risk across three dimensions: businesses, regions and critical products.

Each of the major business groups has a Business Chief Risk Officer who is the focal point for risk decisions (such as setting risk limits or approving transactions) in the business.

There are also Regional Chief Risk Officers, accountable for the risks in their geographic area, and who are the primary risk contact for the regional business heads and local regulators.

In addition, the position of Product Chief Risk Officers was created for those areas of critical importance to Citigroup such as real estate, structured credit products and fundamental credit. The Product Risk Officers are accountable for the risks within their specialty and they focus on problem areas across businesses and regions. The Product Risk Officers serve as a resource to the Chief Risk Officer, as well as to the Business and Regional Chief Risk Officers, to better enable the Business and Regional Chief Risk Officers to focus on the day-to-day management of risks and responsiveness to business flow.

In addition to changing the risk management organization to facilitate the management of risk across these three dimensions, the risk organization also includes the newly-created Business Management team to ensure that the risk organization has the appropriate infrastructure, processes and management reporting. This team includes:

 

•  

the risk capital group, which continues to enhance the risk capital model and ensure that it is consistent across all our business activities;

•  

the risk architecture group, which ensures we have integrated systems and common metrics, and thereby allows us to aggregate and stress test exposures across the institution;

•  

the infrastructure risk group, which focuses on improving our operational processes across businesses and regions; and

•  

the office of the Chief Administrative Officer, which focuses on re-engineering risk communications and relationships, including our critical regulatory relationships.

RISK MANAGEMENT

The Company believes that effective risk management is of primary importance to its success. Accordingly, the Company has a comprehensive risk management process to monitor, evaluate and manage the principal risks it assumes in conducting its activities. These risks include credit, market liquidity and operational, including legal and reputational exposures.

Citigroup’s risk management framework is designed to balance corporate oversight with well-defined independent risk management functions.

Enhancements were made to the risk management framework throughout 2008 based on guiding principles established by the Chief Risk Officer:

 

•  

a common Risk Capital model to evaluate risks;

•  

a defined risk appetite, aligned with business strategy;

•  

accountability through a common framework to manage risks;

•  

risk decisions based on transparent, accurate and rigorous analytics;

•  

expertise, stature, authority and independence of Risk Managers; and

•  

empowering Risk Managers to make decisions and escalate issues.

Significant focus has been placed on fostering a risk culture based on a policy of “Taking Intelligent Risk with Shared Responsibility, without forsaking Individual Accountability.”

 

•  

“Taking intelligent risk” means that Citi must carefully identify, measure and aggregate risks, and must fully understand downside risks.

•  

“Shared responsibility” means that individuals own and influence business outcomes, including risk controls.

•  

“Individual accountability” means individuals held ourselves accountable to actively manage risk.

The Chief Risk Officer, working closely with the Citi CEO, established management committees, Citi’s Audit and Risk Management Committee and Citi’s Board of Directors, is responsible for:

 

•  

establishing core standards for the management, measurement and reporting of risk;

•  

identifying, assessing, communicating and monitoring risks on a company-wide basis;

•  

engaging with senior management and the Board of Directors on a frequent basis on material matters with respect to risk-taking activities in the businesses and related risk management processes; and

•  

ensuring that the risk function has adequate independence, authority, expertise, staffing, technology and resources.

Changes were made to the risk management organization in 2008 to facilitate the management of risk across three dimensions: businesses, regions and critical products.

Each of the major business groups has a Business Chief Risk Officer who is the focal point for risk decisions (such as setting risk limits or approving transactions) in the business.

There are also Regional Chief Risk Officers, accountable for the risks in their geographic area, and who are the primary risk contact for the regional business heads and local regulators.

In addition, the position of Product Chief Risk Officers was created for those areas of critical importance to Citigroup such as real estate, structured credit products and fundamental credit. The Product Risk Officers are accountable for the risks within their specialty and they focus on problem areas across businesses and regions. The Product Risk Officers serve as a resource to the Chief Risk Officer, as well as to the Business and Regional Chief Risk Officers, to better enable the Business and Regional Chief Risk Officers to focus on the day-to-day management of risks and responsiveness to business flow.

In addition to changing the risk management organization to facilitate the management of risk across these three dimensions, the risk organization also includes the newly-created Business Management team to ensure that the risk organization has the appropriate infrastructure, processes and management reporting. This team includes:

 

•  

the risk capital group, which continues to enhance the risk capital model and ensure that it is consistent across all our business activities;

•  

the risk architecture group, which ensures we have integrated systems and common metrics, and thereby allows us to aggregate and stress test exposures across the institution;

•  

the infrastructure risk group, which focuses on improving our operational processes across businesses and regions; and

•  

the office of the Chief Administrative Officer, which focuses on re-engineering risk communications and relationships, including our critical regulatory relationships.

EXCERPTS ON THIS PAGE:

10-K (2 sections)
Feb 27, 2009

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