Board Risk Committee (BRC)
The Board Risk Committee (BRC) has the purpose of assisting the Board of Directors in fulfilling its risk-related responsibilities and advising on the risk tolerance and strategy of EBA CLEARING in compliance with the Company's risk management and compliance framework.
The BRC is composed of Board members only.
Terms of reference
as of 17th April 2013
Introduction and General Considerations
EBA CLEARING operates a systemically relevant payment infrastructure in a pan-European manner. As a Financial Market Infrastructure (“FMI”) the Company should have a sound risk-management framework for comprehensively managing legal, credit, liquidity, operational, and other risks.
In particular EBA CLEARING should:
- have risk-management policies, procedures, and systems that identify, measure, monitor, and manage the range of risks that arise in the FMI;
- provide the incentives and, where relevant, the capacity to participants and their customers to manage and contain their risks;
- regularly review the material risks it bears from and poses to other entities (such as linked FMIs, settlement banks, liquidity providers or service providers) as a result of interdependencies and develop appropriate risk-management tools to address these risks.
The purpose of the Board Risk Committee (the "BRC") is to assist the Board of Directors in fulfilling its oversight responsibilities with regard to the risk tolerance of the Company and the risk management and compliance framework.
Composition, Meetings and Procedures
The BRC will consist of at least three and a maximum of five members of the Board. BRC members and the BRC Chairman shall be appointed by the Board for a period of three years.
There should be no overlap between the members of the AFC and the Board Risk Committee.
The BRC shall meet as frequently as necessary to fulfil its duties and responsibilities, but not less frequently than quarterly. A meeting of the BRC may be called by its chairman or any member.
The BRC may request any officer or employee of the Company, or any special counsel or advisor, to attend a meeting of the BRC or to meet with any members of, or consultant to, the BRC. In carrying out its oversight responsibilities, each BRC member shall be entitled to rely on the integrity and expertise of those persons providing information to the BRC and on the accuracy and completeness of such information, absent actual knowledge of inaccuracy.
Minutes of its meetings will be approved by the BRC and maintained on behalf of the BRC. The BRC shall report its activities to the Board of Directors on a regular basis and make such recommendations as it deems necessary or appropriate.
Sensitive confidential information and documentation relating to the Company and its activities, as well as exchanges and conclusions of the BRC with respect to given matters shall be restricted to the members of the BRC and identified executives, officers or employees of EBA CLEARING.
Specific Responsibilities and Duties
The BRC will have the responsibility to:
- review and recommend to the Board the Company's risk tolerance statement on an annual basis; approve any material amendment to the risk tolerance statement;
- review the risks for the users when using the Company’s services and in particular the risks related to the design of the payment systems operated by the Company;
- review significant financial and other risk exposures and the steps management has taken to monitor, control and report such exposures, including, without limitation, credit, market, liquidity, reputational, operational, fraud, strategic, technology, data-security and business-continuity risks;
- evaluate risk exposure and tolerance;
- review and evaluate the Company's policies and practices with respect to risk assessment and risk management and annually present a report summarising the BRC's reviews;
- review the scope of work of the Internal Risk Management function and its planned activities with respect to the risk management activities of the Company;
- review reports and significant findings of the Internal Risk Management function with respect to the risk management activities of the Company;
- review significant reports from relevant authorities relating to risk management and compliance issues, and management's responses.
The BRC will have the resources and authority appropriate to discharge its responsibilities, including sole authority to retain and terminate the engagement of such consultants or independent counsel to the BRC as it may deem necessary or helpful in carrying out its responsibilities, and to establish the fees and other terms for the retention of such consultants and counsel, such fees to be borne by the Company.
Review of the Terms of Reference
The BRC shall review these Terms of Reference at least every two years and shall recommend changes thereto as appropriate to the Board.