Board Risk Committee - Terms of Reference

1. SCOPE

1.1 Purpose
The Risk Committee is responsible for reviewing and reporting its conclusions to the Board on:

• the Group’s risk appetite (the extent and categories of risk which the Board regards as acceptable for the company to bear); and
• the Group’s risk management framework (embracing principles, policies, methodologies, systems, processes, procedures and people).
  

In that regard, the committee will take a forward looking perspective, anticipating changes in business conditions.

1.2 Authority
The Committee is a committee of the Board of the Company.  The committee is authorised by the Board to:

• a) investigate any activity within its terms of reference;
• b) seek any information that it requires from any employee, and all employees are directed to co-operate with any request made by the committee; and
• c) obtain outside legal or other independent professional advice.
  

2. RESPONSIBILITIES
The responsibilities of the committee shall be to:

2.1 oversee the development, implementation and maintenance of the Group’s overall risk management framework and its risk appetite, strategy, principles and policies, to ensure they are in line with emerging regulatory, corporate governance and industry best practice;

2.2 oversee the Group’s risk exposures, risk/return and proposed improvements to the Group’s risk management framework and its risk appetite, strategy, principles, policies and standards;

2.3 provide formal sign-off for the Board Risk Report within the Annual Report & Accounts

2.4 facilitate the effective contribution and involvement of non-executives and aid their understanding of risk issues and the Group risk management framework;

2.5 provide input to the Remuneration Committee on the alignment of remuneration to risk performance

2.6 review new risk principles and policy and material amendments to risk principles and policy recommended by the Group Chief Executive and CRO, for approval by the Board;

2.7 oversee adherence to Group risk principles, policies and standards and any action taken resulting from material policy breaches across the Group, based upon reports from the Group Chief Executive and the CRO;

• 2.8.1 review the appointment, resignation or dismissal of the CRO and make a recommendation to the Board;
• 2.8.2 review and discuss with the CRO the scope of work of the Group Risk Division, its plans, the issues identified as a result of its work, how management is addressing these issues and the effectiveness of systems of risk management;
• 2.8.3 review the adequacy of the Group Risk Division’s resources, and its authority and standing within the company; and
• 2.8.4 review co-ordination between the Group Risk Division and the external auditors; and

2.9 periodically review and update its own terms of reference to reflect best practice, requesting Board approval for all proposed changes and, at appropriate intervals, evaluate its own performance against the terms of reference.

3. MEMBERSHIP AND ATTENDANCE

3.1 Membership
Members of the Board Risk Committee shall be appointed by the Nomination and Governance Committee in consultation with the chairman of the Board Risk Committee.  Members shall be independent non-executive directors.  At least one of the members of the committee is required to have recent and relevant financial experience.  The members of the Committee are as shown in the Appendix.

3.2 Chairman
The chairman of the committee shall be appointed by the Board.  In the chairman’s temporary absence, one of the directors nominated by the chairman or elected by the other members of the committee will act as chairman.

3.3 Regular Attendees
All other non-executive directors will be invited to attend if they wish.
The Group Chief Executive and the CRO will normally attend meetings and other members of management will attend as appropriate.

3.4 Quorum
The quorum shall be any two members.

4. COMMITTEE MANAGEMENT

4.1 Secretary
The secretary to the committee will be the Company Secretary or their nominee.

4.2 Papers/Agenda
Group Secretariat will support the chairman in managing the business of the committee.  The agenda and papers will be circulated to all members of the committee at least 5 working days before the meeting.

4.3 Minutes
The secretary shall minute the proceedings of all meetings of the committee, including recording the names of those present and in attendance.  Minutes of committee meetings will be circulated promptly to all members of the committee, and the committee chairman will report formally to the Board on the committee's proceedings.

4.4 Frequency
At least quarterly.  The CRO may request a meeting with the committee or its chairman if he feels that one is necessary.

5. VERSION CONTROL

5.1 Review Requirements
These terms of reference are subject to review by the Nomination & Governance Committee at least annually, or as required by the Board.

Appendix – Membership 
Details of committee membership can be obtained from the Lloyds Banking Group plc Annual Report and Accounts 2012.