Risk and Compliance Committee report
The Committee’s areas of focus Risk appetite
• Overseeing and recommending to the Board the Group’s risk appetite statements, key risk indicators and tolerances for controlling risk within the Board’s stated appetite; • Monitoring the Group’s risk appetite statements, key risk indicators and tolerances;
• Reviewing any red-rated risks and assessing the adequacy of mitigating or remedial actions; and • Monitoring steps taken by management to bring red-rated risks in line with the Board’s risk appetite.
Capital and liquidity requirements
• Overseeing the Group’s Internal Capital Adequacy and Risk Assessment (“ICARA”) process and its compliance with regulatory capital and liquidity requirements; • Recommending the harm scenarios to be considered and stress tested in the ICARA, as well as liquidity stress tests to be undertaken; • Reviewing and challenging the methodology and output of stress tests, considering recommended management responses, and ensuring that results are incorporated appropriately in the Group’s capital and liquidity planning; and • Ensuring that ongoing consideration is given to capital and liquidity matters as decisions are taken by the Group Board and Executive Committee. • Monitoring external developments, for example competition, market conditions, macroeconomic and regulatory environment, taxation and legal developments, in order to assess the potential impact on the Group; • Periodically reviewing the Group’s potential risk exposures, and considering and challenging management’s methodology to identify and address such exposures; and • Recommending to the Board the principal risks to be reported in the Annual Report and Accounts. • Reviewing, on at least an annual basis, the adequacy and effectiveness of the Group’s risk and control processes to support its strategy and objectives, and monitoring the implementation of enhancements identified; • Reviewing the Group’s approach to the management of outsourcing arrangements; • Maintaining oversight of material issues, errors, breaches and complaints, including consideration of the adequacy of management actions proposed and any consequent implications for the Group’s risk appetite status and framework; • Overseeing the scope and effectiveness of second-line assurance work, whilst considering the results of work undertaken by the third line insofar as it affects the Committee’s areas of responsibilities; and • Ensuring that the second-line assurance programme is adequate in view of the complexity and risk profile of the Group, whilst monitoring completion of its work and overseeing remedial actions arising as appropriate.
Top-down and emerging risks
Risk management framework
Overseeing regulatory compliance
• Considering regulatory developments and the potential impact on the Group; • Reviewing key regulatory topics through reports prepared by second-line teams; and • Overseeing regulatory-related projects.
Oversight of the effectiveness of the Risk and Compliance functions
• Safeguarding the independence of the Risk and Compliance teams, and reviewing the adequacy of resources, reporting any concerns to the Board; • Receiving reports from second-line teams, and in particular the CRO, and promoting an open and transparent risk culture; • Maintaining effective oversight of the Risk and Compliance functions, monitoring performance against plan; and • Reviewing key communications with regulators and fostering a culture of cooperation and compliance.
98 Brooks Macdonald Group plc Annual Report and Accounts 2024
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