Risk management in main risk types

Compliance risk

The group is subject to extensive supervisory and regulatory regimes in all countries in which it operates. While executive management remains responsible for overseeing the management of the bank’s compliance risk, group compliance actively engages with management and compliance officers within business units and subsidiaries to proactively support the generation of legal, ethical and profitable business. This is achieved via three service delivery streams: administration and support services; regulatory services and analysis; and monitoring.

Specialist support units aid higher exposure compliance risk requirements. The support and regulatory services ensure that management and staff are kept informed of regulatory developments and trained as necessary. The monitoring department uses a risk-based methodology, integrated with the methodologies used by the group’s other risk assurance functions, to review and report on the compliance risk exposures and the efficacy of the compliance risk management system. Business units are required to report to the group function on a quarterly basis or more regularly if appropriate.

Group compliance is the prime interface between the South African regulators and the group. Bank supervision and oversight became increasingly rigorous in 2005. The Bank Supervision Department of the SARB is our lead regulator while the Financial Services Board (FSB) has jurisdiction over consumer protection issues relating to bancassurance products. In addition, our offshore operations are subject to the regulations imposed by their respective host country regulators. Key challenges locally during 2005 have continued to relate to Financial Intelligence Centre Act (FICA) requirements for the re-identification and verification of clients, and the FSB’s accreditation of financial service providers.

Money laundering control and occupational health and safety (including aspects of environmental risk management) are managed within group compliance and there are increasingly onerous legislative requirements being imposed in both these areas.