KEYCORP NEW
For the period ended Dec 31, 2023. Filed Feb 22, 2024.
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FY2023 · Filed Feb 22, 2024
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Overview
Like all financial services companies, we engage in business activities and assume the related risks. The most significant risks we face are credit, compliance, operational, liquidity, market, reputation, strategic, and model risks. Our risk management activities are shown in the following chart, and we manage such risks across the entire enterprise to maintain safety and soundness and maximize profitability. Certain of these risks are defined and discussed in greater detail in the remainder of this section.
Federal banking regulators continue to emphasize with financial institutions the importance of relating capital management strategy to the level of risk at each institution. We believe our internal risk management processes help us achieve and maintain capital levels that are commensurate with our business activities and risks, and conform to regulatory expectations. The table below depicts our risk management hierarchy and associated responsibilities and activities of each group.
| Group | Overview and Responsibilities | Activities |
|---|---|---|
| Board of Directors | –Oversight capacity–Oversees that Key’s risks are managed in a manner that is effective and balanced–Fiduciary duty to Key’s shareholders | –Understands Key's risk philosophy–Approves the risk appetite–Inquires about risk practices–Reviews the portfolio of risks–Compares the actual risks to the risk appetite–Is apprised of significant risks, both actual and emerging, and determines whether management is responding appropriately–Challenges management and promotes accountability |
| Board of Directors Audit Committee (a) | –Oversight of financial statement integrity, regulatory and legal requirements, independent auditors’ qualifications and independence, and the performance of the internal audit function and independent auditors–Financial reporting, legal matters, and fraud risk | –Meets with management and approves significant policies relating to the risk areas overseen by the Audit Committee–Receives reports on enterprise risk–Meets bi-monthly–Convenes to discuss the content of our financial disclosures and quarterly earnings releases |
| Board of Directors Risk Committee (a) | –Assist the Board in oversight of strategies, policies, procedures, and practices relating to the assessment and management of enterprise-wide risk, including credit, market, liquidity, model, operational, compliance, reputation, and strategic risks–Assist the Board in overseeing risks related to capital adequacy, capital planning, and capital actions | –Reviews and provides oversight of management’s activities related to the enterprise-wide risk management framework, which includes an annual review of the ERM Policy, including the Risk Appetite Statement, and management and ERM reports–Approves any material changes to the charter of the ERM Committee and significant policies relating to risk management, including corporate risk tolerances for major risk categories |
| ERM Committee | –Chaired by the Chief Executive Officer and comprising other senior level executives–Manage risk and ensure that the corporate risk profile is managed in a manner consistent with our risk appetite–Oversees the ERM Program, which encompasses our risk philosophy, policy, framework, and governance structure for the management of risks across the entire company | –Approves and manages the risk-adjusted capital framework we use to manage risks |
| Disclosure Committee | –Includes representatives from each of the Three Lines of Defense–Meets quarterly to review recent internal and external events to determine whether all appropriate disclosures have been made in reports filed with the SEC | –Convenes quarterly to discuss the content of our 10-Q and 10-K |
| Tier 2 Risk Governance Committees | –Include attendees from each of the Three Lines of Defense–The First Line of Defense is the line of business primarily responsible to accept, own, proactively identify, monitor, and manage risk–The Second Line of Defense comprises Risk Management representatives who provide independent, centralized oversight over all risk categories by aggregating, analyzing, and reporting risk information–Risk Review, our internal audit function, provides the Third Line of Defense. Its role is to provide independent assessment and testing of the effectiveness of, appropriateness of, and adherence to KeyCorp’s risk management policies, practices, and controls | –Supports the ERM Committee by identifying early warning events and trends, escalating emerging risks, and discussing forward-looking assessments |
| Chief Risk Officer | –Ensure that relevant risk information is properly integrated into strategic and business decisions–Ensure appropriate ownership of risks | –Provides input into performance and compensation decisions–Assesses aggregate enterprise risk–Monitors capabilities to manage critical risks–Executes appropriate Board and stakeholder reporting |
(a) The Audit and Risk Committees meet jointly, as appropriate, to discuss matters that relate to each committee’s responsibilities. Committee chairpersons routinely meet with management during interim months to plan agendas for upcoming meetings and to discuss emerging trends and events that have transpired since the preceding meeting. All members of the Board receive formal reports designed to keep them abreast of significant developments during the interim months.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.