no. dn-010 august 2010

Enhanced Disclosure in the Dow 30 and Select Financial Companies

The Role of the Board in Risk Oversightby Louis L. Goldberg and Mutya Fonte Harsch

The analysis of disclosure included in 2010 proxy statements by leading U.S. publiccompanies shows that, at the board level, two models of risk oversight are emerging:the committee model and the active board model. A slight majority of the surveyedcompanies delegates the primary responsibility for coordinating risk oversight to astanding committee of the board (typically, the audit committee or, in the case offinancial institutions, a dedicated risk committee). Even among organizations withthe committee model, most reported that their board exercises some degree of direct and active oversight for risks related to the company’s strategic direction andbusiness plan.

I n an attempt to address the perception that risk oversight

failures played prominently in recent business crises, the SEC

enacted Item 407(h) of Regulation S-K, which requires

companies to disclose in their proxies, “the extent of the board’s

role in the risk oversight of the registrant, such as how the board

administers its oversight function, and the effect that this has

on the board’s leadership structure.”1

This Director Notes is the first in a series of studies developed in

collaboration with Davis Polk & Wardwell LLP to provide

guidelines and examples to member companies of The

Conference Board on emerging practices following the SEC

enhanced disclosure reform of December 2009. It is based on the

analysis of 2010 proxy statements of the 30 companies in the

Dow Jones Industrial Average as well as those of five additional

select financial institutions (see “The Survey” on p. 3).

Director NotesThe 2010 Proxy Season

Although the disclosure varies widely—

reflecting the fact that companies are still

at the early stage of the rule implementa-

tion and that interpretive guidance from

the SEC remains somewhat limited—a

number of important observations can be

made. The results for financial companies

are presented separately, in recognition of

their particular approach to risk oversight

in light of differences in their business

model and regulatory regime. (See

Appendix 1 on p. 8 for a comparative table

reproducing the disclosure language used

by surveyed companies.)

Risk Oversight at the Board LevelAt the board level, two models of risk oversight seem to be

emerging: the “committee model” and the “active board

model,” with significant variations within each. In a handful

of cases, the disclosure is much less developed, making it

difficult to determine whether the board or a committee had

primary responsibility for risk oversight.

The committee model A slight majority of the non-financial

companies surveyed for this study delegates the primary

responsibility for coordinating risk oversight to the audit

committee (or, in one case, to the risk committee), even

though some of these companies have included in their prox-

ies a statement to the effect that the full board retained “ulti-

mate” responsibility in this area.

The duties of the relevant committee in this committee model

vary, but typically include:

1. the responsibility for reviewing the company’s risk over-sight framework (i.e. the policies and procedures withrespect to risk assessment and risk management); and

2. working with management to identify the company’s

major risk exposures and the steps taken to monitor and

address such risks. In most of these cases, the audit com-

mittee or risk committee regularly report their risk over-

sight findings to the full board.

Of the companies surveyed for this study, 52 percent of the

non-financials and 60 percent of the financials delegate the

primary responsibility for coordinating risk oversight to the

audit committee or a dedicated, stand-alone risk committee.

The survey also revealed that only one non-financial com-

pany and four of the five financial companies surveyed have

a stand-alone risk committee and charter.

The active board model In the active board model, boards

retain primary responsibility for coordinating risk oversight

functions, with individual board committees tasked to over-

see specific risks. Under this model, either the full board or

the audit committee reviews the company’s risk oversight

framework, and the board receives regular reports not only

from board committees but also directly from the chief risk

officer (CRO) and/or senior management regarding certain

major risks facing the company and the steps taken by man-

agement to manage and mitigate those risks.

Strategic risk oversight Regardless of whether the board

retains primary responsibility for risk oversight or delegates

it to the audit committee or risk committee, a large majority

of non-financial companies reported that their board exer-

cises some degree of direct and active oversight for risks

related to the company’s strategic direction and business

plans and for specifically identified risks.

2 director notes the role of the board in risk oversight www.conferenceboard.org

Risk Oversight Models – Non-financial companies

Chart 1

Committee modelActive board model

52%48

Risk Oversight Models – Financial companies

Chart 2

Committee modelActive board model

60%40

Seventy percent of all non-financial companies surveyed

included disclosure that the board retained direct oversight of

strategic business risks at the board level. None of the financial

companies surveyed included such disclosure.

Hybrid models in financial companies The risk oversight

structure of financial companies generally contains aspects of

both the committee model and the active board model. Three

of the five financial companies surveyed report delegating

primary risk oversight responsibility to the risk committee or

audit committee, whereas the other two have active boards

that retain primary responsibility for risk oversight and a

direct reporting line between the CRO and the CEO or the

board. All of the financials surveyed have a CRO. Only one

of the financials surveyed does not have a formal risk com-

mittee and charter.

Of the four financial companies with a stand-alone risk com-

mittee and charter, two do not seem to delegate primary

responsibility for the coordination of risk oversight to the

risk committee but rather retain primary risk oversight

responsibility with the full board.2

director notes the role of the board in risk oversight www.conferenceboard.org 3

Strategic Business Risk Oversight – Non-financial companies

Chart 3

Direct oversight by the full boardOther

70%30

The SurveyFindings discussed in this report are based on the analysis of 2010 proxy statements filed with the U.S. Securities and Exchange Commission by corporations in the Dow Jones Industrial Average, as well as those of select financial institutions. See Appendix 1 on p. 8 for a comparative table reproducing the disclosure language used by surveyed companies.

Dow 30 Companies

3M Company

Intel Corporation

Alcoa Inc.

International Business MachinesCorporation

American Express Company

Johnson & Johnson

AT&T Inc.

JPMorgan Chase & Co.

Bank of America Corporation

Kraft Foods, Inc.

The Boeing Company

McDonald’s Corporation

Caterpillar Inc.

Merck & Co., Inc

Chevron Corporation

Microsoft Corporationa

Cisco Systems, Inc.a

Pfizer Inc.

The Coca-Cola Company

The Procter & Gamble Companya

E.I. du Pont de Nemours andCompany

The Travelers Companies, Inc.

Exxon Mobil Corporation

United Technologies Corporationa

General Electric Company

Verizon Communications Inc.

Wal-Mart Stores, Inc.

Hewlett-Packard Companya

The Walt Disney Companya

The Home Depot, Inc.

Select Financial Institutions

Bank of America Corporationb

Citigroup Inc.

The Goldman Sachs Group, Inc.

JPMorgan Chase & Co.b

Morgan Stanley

a These companies (collectively the “Early Filers”) filed their proxy statement before the effective date of the new Regulation S-K rules. As a result, they are largely excluded from the Survey results except in instances where the company provided the new disclosures in full voluntarily or the information was available from another source, as noted.

b Bank of America and JPMorgan Chase are also in the Dow 30.

Risk Management at the Management LevelAlthough the SEC disclosure requirement focuses on the

board’s role in risk oversight, as opposed to risk management,many surveyed companies (as many as 43 percent in the non-

financial sector) also included disclosure of their approach to

risk management at the senior management level.

From this limited information, the following should be noted:

Efforts to integrate ERM Reflecting the prominence of risk

issues in today’s environment, more than two-thirds of the

non-financial companies surveyed included a discussion of

“enterprise” risk management in their disclosure. Of those

companies, more than half specifically disclosed the adoption

of a formal enterprise risk management (ERM) system (see

“Enterprise Risk Management Framework” below). Though

not discussed in detail, the ERM systems generally included

a process by which management identified, monitored, and

managed major risks. The remaining companies that decided

not to cover enterprise risks in the filings either did not dis-

cuss their risk management approach at all or included a gen-

4 director notes the role of the board in risk oversight www.conferenceboard.org

Enterprise Risk Management FrameworkIncreasingly, boards and management teams are embracing the concept of enterprise risk management (ERM) to connecttheir risk oversight responsibilities with the desire to create and protect shareholder value. The ERM process was first formalized by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in guidelines released in2004.a COSO’s framework has since been adopted by a number of companies as a means by which to effectively managerisks across complex business units.b

The COSO guidelines define ERM as a process (developedunder the oversight of the entity’s board of directors, management and other personnel) that:

1. applies across the entire enterprise including in thecreation of the entity’s business strategy.

2. identifies potential risk events that may affect the entity.

3. ensures that risks are managed within the risk appetiteof the entity.

4. provides reasonable means by which to measure theentity’s achievement of objectives.

To implement the ERM framework, COSO highlights the following four areas:

• Understand the entity’s risk philosophy and concur withthe entity’s risk appetite.

• Know the extent to which management has establishedeffective enterprise risk management of the organization.

• Review the entity’s portfolio of risk and consider itagainst the entity’s risk appetite.

• Be apprised of the most significant risks and whethermanagement is responding appropriately.

a Committee of the Sponsoring Organizations of the Treadway Commission (COSO), Enterprise Risk Management—Integrated Framework, September2004. For guidelines on the role of the board of directors in the process, also see COSO, Effective Enterprise Risk Oversight: The Role of the Board of Directors, August 2009.

b For a number of notable case studies of ERM application driven by board members, see Matteo Tonello, Emerging Governance Practices in EnterpriseRisk Management, The Conference Board, Working Group Report No. 1398, 2007.

Risk Management Disclosure – Non-financial companies

Chart 4

Disclosure of senior management role in risk managementNo disclosure on this issue

43%57

eral statement that it is the responsibility of senior manage-

ment to manage risk and bring the material risks to the atten-

tion of the board.

• Seventy percent of the non-financial companiessurveyed used the word “enterprise” in their riskoversight disclosure, and 63 percent of those companies have a formal ERM framework in place.

The rise of the chief risk officer Those surveyed, non-finan-

cial companies that have either adopted a formal ERM sys-

tem or discussed the management of “enterprise” risks in

their disclosure also typically report availing themselves of a

dedicated CRO or an existing officer (such as the VP of

internal audit and corporate compliance) who also fulfills the

same role. In most cases, the CRO (or equivalent) reports to

the risk committee or audit committee. In a few cases, that

person reports to the full board.

• Only three of the non-financial companies surveyed have a dedicated CRO, although six of the non-financialcompanies have existing officers who also fulfilled chiefrisk officer duties.

• One hundred percent of the financial companiessurveyed have a CRO.

Even though all of the financial companies surveyed pro-

vided detailed disclosure of the firm’s risk management

structure and programs, surprisingly, most of them did not

expressly mention “enterprise” risk in their discussion. The

financial companies that discussed enterprise risks did so in

the context of their ERM framework.

All of the financial companies surveyed have a dedicated

CRO with detailed enterprise-wide responsibilities: in three

cases the CRO reports to the risk committee or the audit

committee, while in the other two the CRO reports directly to

the board. This finding could indicate that even the compa-

nies that did not discuss “enterprise” risks in their disclosure

may have a formal ERM-type system in place, but use a dif-

ferent terminology to identify it and describe it.

Other ObservationsEven though the SEC rule suggests that companies address

“the effect that the board’s risk oversight role had on its lead-

ership structure,” only few surveyed companies actually

included such disclosure. This may indicate that most issuers

still have not identified any real linkage between the two

aspects. Companies that included such disclosure did so in

mostly conclusory terms.

Compensation risks are commonly discussed as among the

risks overseen by the compensation committee. However,

only a handful of companies addressed in the disclosure sec-

tion on “board oversight of risk” the separate SEC require-

ment in new Item 402(s) of Regulation S-K that companies

disclose compensation risks that are “reasonably likely to

have a material adverse effect on the registrant.” In the few

cases where this rule was expressly addressed, the companies

included an affirmative statement that no material adverse

effect was likely.

All but one company provided the required board oversight

of risk disclosure in a separately captioned section. The only

company that did not do so included the same information

within the description of the responsibilities of each of the

board’s committees.

Endnote1 SEC Release No. 33-9089; 34-61175 (“Proxy Disclosure Enhancements”),

December 16, 2009, available at www.sec.gov/rules/final/2009/33-9089.pdf. The rules apply to proxy and information statements, annualreports and registration statements under the Exchange Act, and registra-tion statements under the Securities Act as well as the InvestmentCompany Act. They do not apply to foreign private issuers. For an extensivediscussion of the practical implications of the reform, see William M. Kellyand Mutya Fonte Harsch, “Directors’ Duties Under the New SEC Rules onDisclosure Enhancement,” Director Notes No. DN-005, February 2010.

2 Under The Wall Street Reform and Consumer Protection Act of 2010 (alsoknown as the Dodd-Frank Act), the Federal Reserve is mandated to issuerules requiring bank holding companies with over $10 billion in assets toestablish a risk committee of the board of directors.

director notes the role of the board in risk oversight www.conferenceboard.org 5

6 director notes the role of the board in risk oversight www.conferenceboard.org

Sample Risk Committee Charter*

Neither the NYSE nor Nasdaq requires a risk committee of theboard of directors. Some companies, primarily financial institu-tions, have determined that having a separately designatedrisk committee is useful in helping to fulfill the board’s riskoversight role. Other companies, however, might conclude thatit is not necessary to have a separate risk committee and thatan existing committee, typically the audit committee, shouldrather play a primary role in risk oversight.

Subject to the specific regulatory requirement of the Dodd-Frank Act that certain bank holding companies institute a riskcommittee of the board, the risk committee charter should bestructured to best fit the needs of a particular company.

Presently, as a regulatory matter, risk committee membersneed not be independent.

In drafting a risk committee charter, attention should be paidto footnote “a” below for relevant NYSE/Nasdaq/SEC consid-erations, including possible corresponding changes to theaudit committee or compensation committee charters, or thecharters of other committees that may also share risk over-sight in particular areas.

[COMPANY NAME]

A [Delaware] Corporation

(the “Company”)

Risk Committee Chartera

Adopted _________, 20__

Purposeb

The Risk Committee is created by the Board of Directors of theCompany (the “Board”) to [assist the Board in its oversight ofthe Company’s risk management] OR [assist the Board in itsoversight of the Company’s risk management and risk assess-ment regarding credit risk, market risk, liquidity risk, invest-ment risk, interest rate risk and funding risk].

MembershipThe Risk Committee shall consist of at least [three] members.The [Board] [Nominating and Corporate GovernanceCommittee]c shall recommend nominees for appointment tothe Committee annually and as vacancies or newly createdpositions occur. Committee members shall be elected by theBoard and may be removed by the Board at any time. The[Nominating and Corporate Governance Committee shall rec-ommend to the Board, and the Board shall designate,][Boardshall designate]d the Chairman of the Committee.

Responsibilitiese

In addition to any other responsibilities, which may beassigned from time to time by the Board, the Risk Committeeis responsible for the following matters.

Risk Management Processes

Review and discuss with management the Company’s [riskmanagement and risk assessment processes][enterprise riskmanagement framework], including any policies and proce-dures for the identification, evaluation and mitigation of majorrisks of the Company.

Receive periodic reports from management [and the internalrisk management function][chief risk officer] as to efforts tomonitor, control and mitigate major risks.

* Prepared by Ning Chiu, a counsel in Davis Polk's corporate department whospecializes in corporate governance matters.

a NYSE Sections 303A.07(b)(iii)(D) requires the audit committee to discuss poli-cies with respect to risk assessment and risk management. According to thecommentary, the audit committee must discuss guidelines and policies to gov-ern the process by which the CEO and senior management assess and managethe listed company’s exposure to risk. The audit committee should discuss thelisted company’s major financial risk exposures and the steps management hastaken to monitor and control such exposures. The commentary indicates thatwhile the audit committee is not required to be the sole body responsible forrisk assessment and management, the committee must discuss guidelines andpolicies to govern the process by which risk assessment and management isundertaken. The commentary recognizes that many companies, particularlyfinancial companies, manage and assess their risk through mechanisms otherthan the audit committee. The commentary goes on to state that the processesthese companies have in place should be reviewed in a general manner by theaudit committee, but they need not be replaced by the audit committee.Nasdaq does not have any particular requirements related to board or commit-tee oversight of risk.

If this Risk Committee Charter is adopted, corresponding changes may need tobe made to the Audit Committee charter or the charter of any other committeethat is also responsible for specific elements of risk oversight, such as theCompensation Committee.

Item 407(h) of Regulation S-K requires disclosure of the extent of the board’srole in the risk oversight of the company, such as how the board administersits oversight function, and the effect that this has on the board’s leadershipstructure.

b Depends upon whether the Risk Committee is responsible for oversight of acompany’s general risk areas, or whether the Committee is responsible foroversight of specific risk areas.

c Depends upon how the Board chooses to assign this responsibility.

d Same as preceding footnote.

e Subject to the Dodd-Frank Act, with respect to certain bank-holding compa-nies, the Risk Committee’s responsibilities may be established by the Board. Inaddition, a regulated financial institution may wish to include specific responsi-bilities with respect to certain areas, such as risk tolerance or risk metrics.

director notes the role of the board in risk oversight www.conferenceboard.org 7

Review certain major categories of risk exposure of theCompany such as operational, market, credit, interest rate,liquidity, and reputational risks, against any benchmarks ormethodologies as appropriate.

[Evaluate senior management’s performance in complyingwith risk-related policies and procedures].

Risk Management Function

[At least annually,] the Risk Committee shall evaluate the per-formance, responsibilities, budget, and staffing of theCompany’s risk management function.f

[At least annually,] the Risk Committee shall evaluate the per-formance of the [Chief Risk Officer]g [senior officer or offi-cers] responsible for the risk management function of theCompany, and make recommendations to the Board andmanagement regarding the responsibilities, [compensation],retention or termination of such officer or officers.

CoordinationThe Chairman of the Risk Committee [shall coordinate withthe Chairman of the Audit Committee and the Chairman ofthe Compensation Committee as necessary] OR [shall coordi-nate with the Chairman of the Audit Committee with respectto the Audit Committee’s responsibilities as to risk assess-ment and risk management and the Chairman of theCompensation Committee as to the CompensationCommittee’s responsibilities with respect to the review andevaluation of risks in compensation arrangements].

Reporting to the BoardThe Risk Committee shall report to the Board periodically.This report shall include a review of risk oversight processes,any issues that arise with respect to management’s identifi-cation, review and mitigation of the Company’s risks, the per-formance of the risk management function, and any othermatters that the Risk Committee deems appropriate or isrequested to include by the Board.

At least annually, the Risk Committee shall evaluate its ownperformance and report to the Board on such evaluation.

The Risk Committee shall periodically review and assess theadequacy of this charter and recommend any proposedchanges to the [Nominating and Corporate GovernanceCommittee][Board].

Authority and DelegationsThe Risk Committee is authorized (without seeking Boardapproval) to retain special legal, accounting, or other advisorsand may request any officer or employee of the Company orthe Company’s outside counsel or independent auditor tomeet with any members of, or advisors to, the RiskCommittee.

The Risk Committee shall have available appropriate fundingfrom the Company as determined by the Risk Committee forpayment of:

• compensation to any advisers employed by the RiskCommittee; and

• ordinary administrative expenses of the Risk Committeethat are necessary or appropriate in carrying out itsduties.

The Risk Committee may delegate its authority to subcommit-tees or the Chairman of the Risk Committee when it deemsappropriate and in the best interests of the Company.

ProceduresThe Risk Committee shall meet as often as it determines isappropriate to carry out its responsibilities under this charter,but not less frequently than quarterly. The Chairman of theRisk Committee, in consultation with the other committeemembers, shall determine the frequency and length of com-mittee meetings and shall set meeting agendas consistentwith this charter.

Limitations Inherent in the Risk Committee’s RoleWhile the Risk Committee is responsible for reviewing theCompany’s oversight framework (i.e., policies and procedureswith respect to risk assessment and management), it is theresponsibility of the CEO and senior management to assessand manage the Company’s exposure to risk.

f If the company has a separate risk management function.

g If the company has a chief risk officer. Some companies may have a chief riskofficer reporting directly (or on a dotted-line basis) to the Risk Committee.

Sample Risk Committee Charter continued

8 director notes the role of the board in risk oversight www.conferenceboard.org

Ap

pen

dix

1

Co

mp

an

y

(no

n-f

ina

ncia

l in

sti

tuti

on

)

Fo

rmal

Ris

k

Co

mm

itte

e/

Ch

art

er?

(Y

/ N

)

Ris

ks d

ele

gate

d t

o c

om

mit

tees

(in

clu

de n

am

e o

f co

mm

itte

e a

nd

d

es

cri

pti

on

of

risks)

Ris

ks r

evie

wed

at

the b

oard

le

vel

wit

ho

ut

co

mm

itte

e

Is “

en

terp

rise r

isk

man

ag

em

en

t”

dis

cu

ssed

?

If y

es,

ho

w?

Is t

here

a C

hie

f R

isk O

ffic

er?

If

yes, to

wh

om

d

oes h

e o

r sh

e

rep

ort

?

Ap

pro

ach

to

all

ocati

on

o

f ri

sk t

o m

an

ag

em

en

t

Co

mp

en

sati

on

ri

sk i

nclu

ded

in

g

en

era

l ri

sk

dis

cu

ssio

n?

If

yes,

ho

w?

No.

Audit C

om

mitte

e h

as p

rim

ary

re

sponsib

ility

for

risk o

vers

ight.

Audit

Com

mitte

e r

equired t

o d

iscuss

polic

ies a

nd p

rocedure

s w

ith r

espect

to r

isk a

ssessm

ent

and r

isk

managem

ent,

the c

om

pany’s

majo

r risk e

xposure

s a

nd t

he s

teps t

o

addre

ss the r

isk.

Com

pensation C

om

mitte

e is

responsib

le for

risks a

ssocia

ted w

ith

com

pensation p

ractices, in

clu

din

g a

n

annual re

vie

w o

f th

e c

om

pany’s

ris

k

assessm

ent

of

its c

om

pensation a

nd

polic

ies for

its e

mplo

yees.

Fin

ance C

om

mitte

e r

evie

ws r

isks

associa

ted w

ith t

he c

om

pany’s

capital

str

uctu

re,

cre

dit r

atings a

nd its

cost

of

capital, long-t

erm

benefit

oblig

ations

and its

use o

f or

investm

ent

in

financia

l pro

ducts

, in

clu

din

g

derivatives u

sed t

o m

anage r

isk

rela

ted t

o fore

ign c

urr

encie

s,

com

moditie

s a

nd inte

rest

rate

s.

Nom

inating a

nd G

overn

ance

Com

mitte

e r

evie

ws r

isks a

ssocia

ted

with t

he o

vera

ll govern

ance a

nd

successio

n p

lannin

g p

rocess to

ensure

that

the c

om

pany h

as a

sla

te

of

futu

re,

qualif

ied c

andid

ate

s for

key

managem

ent.

Board

receiv

es m

inute

s a

nd

sum

maries o

f m

atters

dis

cussed in e

ach o

f th

e

com

mitte

es t

hat

overs

ee r

isk.

The C

EO

brings k

ey b

usin

ess

issues a

nd r

isks to the b

oard

’s

att

ention.

Board

may r

eceiv

e r

eport

s

from

executives r

esponsib

le

for

managin

g a

part

icula

r risk

on h

ow

the r

isk is b

ein

g

managed a

nd m

itig

ate

d.

Not

dis

cussed.

N

o.

The V

P a

nd

Genera

l A

uditor

is

responsib

le for

leadin

g t

he form

al

risk a

ssessm

ent

and m

anagem

ent

pro

cess.

Report

s to A

udit

Com

mitte

e.

The V

P a

nd G

enera

l A

uditor,

thro

ugh

consultation w

ith t

he

com

pany's

senio

r m

anagem

ent,

periodic

ally

assesses

the m

ajo

r risks f

acin

g

the c

om

pany a

nd w

ork

s

with t

hose e

xecutives

responsib

le for

managin

g e

ach s

pecific

risk.

The V

P a

nd G

enera

l A

uditor

periodic

ally

re

vie

ws w

ith t

he A

udit

Com

mitte

e the m

ajo

r risks facin

g t

he

com

pany a

nd the s

teps

managem

ent

has taken

to m

onitor

and m

itig

ate

th

ose r

isks.

The e

xecutive

responsib

le for

managin

g a

part

icula

r risk m

ay a

lso r

eport

to

the f

ull

board

on h

ow

th

e r

isk is b

ein

g

managed a

nd

mitig

ate

d.

Yes. S

ee “

Ris

ks

dele

gate

d t

o

com

mitte

es –

C

om

pensation

Com

mitte

e.”

No.

Audit C

om

mitte

e o

vers

ees r

isk

pert

ain

ing t

o (

1)

ente

rprise-w

ide r

isk

managem

ent,

whic

h f

ocuses p

rim

arily

on t

he r

ela

tionship

betw

een t

he

com

modity p

ricin

g o

f alu

min

um

on

the L

ondon M

eta

l E

xchange a

nd

majo

r cost in

puts

, in

clu

din

g fore

ign

exchange r

ate

s a

nd e

nerg

y a

nd (

2)

treasury

ris

ks (

insura

nce,

cre

dit a

nd

debt)

, financia

l and a

ccounting,

legal

and c

om

plia

nce r

isks, in

form

ation

technolo

gy s

ecurity

ris

ks a

nd o

ther

risk m

anagem

ent fu

nctions.

Public

Issues C

om

mitte

e c

onsid

ers

Board

consid

ers

str

ate

gic

risks a

nd o

pport

unitie

s a

nd

regula

rly r

eceiv

es d

eta

iled

report

s f

rom

the c

om

mitte

es

regard

ing r

isk o

vers

ight

in

their a

reas o

f re

sponsib

ility

. B

oard

overs

ees p

rocesses

esta

blis

hed to r

eport

and

monitor

syste

ms for

mate

rial

risks a

pplic

able

to t

he

com

pany.

Yes. S

ee “

Ris

ks

dele

gate

d t

o c

om

mitte

es

– A

udit C

om

mitte

e.”

None s

pecifie

d.

It is m

anagem

ent’s

responsib

ility

to

manage r

isk a

nd b

ring

to t

he b

oard

’s a

ttention

the m

ost m

ate

rial risks

to t

he c

om

pany.

Yes. S

ee “

Ris

ks

dele

gate

d t

o

com

mitte

es –

C

om

pensation

and B

enefits

C

om

mitte

e.”

S

tate

ment

that

com

pany

dete

rmin

ed t

hat

it

is n

ot

reasonably

lik

ely

that

com

pensation

and b

enefit

pla

ns

1x

di

np

pe

A

al

ci

na

nif-n

on(

yn

ap

mo

C

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App

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x 1

director notes the role of the board in risk oversight www.conferenceboard.org 9

Co

mp

an

y

(no

n-f

ina

ncia

l in

sti

tuti

on

)

Fo

rmal

Ris

k

Co

mm

itte

e/

Ch

art

er?

(Y

/ N

)

Ris

ks d

ele

gate

d t

o c

om

mit

tees

(in

clu

de n

am

e o

f co

mm

itte

e a

nd

d

es

cri

pti

on

of

risks)

Ris

ks r

evie

wed

at

the b

oard

le

vel

wit

ho

ut

co

mm

itte

e

Is “

en

terp

rise r

isk

man

ag

em

en

t”

dis

cu

ssed

?

If y

es,

ho

w?

Is t

here

a C

hie

f R

isk O

ffic

er?

If

yes, to

wh

om

d

oes h

e o

r sh

e

rep

ort

?

Ap

pro

ach

to

all

ocati

on

o

f ri

sk t

o m

an

ag

em

en

t

Co

mp

en

sati

on

ri

sk i

nclu

ded

in

g

en

era

l ri

sk

dis

cu

ssio

n?

If

yes,

ho

w?

co

ntin

ued

risks r

ela

ted to t

he c

om

pany’s

re

puta

tion a

nd r

evie

ws r

isks r

ela

ted

to t

he s

usta

inabili

ty o

f its o

pera

tions.

Govern

ance a

nd N

om

inating

Com

mitte

e c

onsid

ers

ris

ks r

ela

ting t

o

successio

n p

lannin

g a

nd o

vers

ees

the a

ppro

priate

allo

cation o

f re

sponsib

ility

for

risk o

vers

ight am

ong

the c

om

mitte

es o

f th

e b

oard

.

Com

pensation a

nd B

enefits

C

om

mitte

e c

onsid

ers

ris

ks r

ela

ted to

the a

ttra

ction a

nd r

ete

ntion o

f ta

lent

and r

isks r

ela

ting to the d

esig

n o

f com

pensation p

rogra

ms a

nd

arr

angem

ents

.

would

have a

m

ate

rial advers

e

eff

ect

on t

he

com

pany.

Yes.

Audit a

nd R

isk C

om

mitte

e (

1)

meets

re

gula

rly in e

xecutive s

essio

n w

ith t

he

CR

O w

ith r

egard

to t

he c

om

pany’s

risk m

anagem

ent

pro

cesses, contr

ols

and c

apabili

ties a

nd (

2)

appro

ves the

ER

M p

olic

y a

s w

ell

as r

isk p

olic

ies in

specific

ris

k a

reas.

C

om

pensation C

om

mitte

e o

vers

ees

executive c

om

pensation

arr

angem

ents

, in

clu

din

g t

he

com

pany’s

actions to a

ttra

ct

and

reta

in e

xecutive t

ale

nt,

foste

r th

e

appro

priate

lin

kage b

etw

een p

ay a

nd

perf

orm

ance a

nd d

evelo

p

com

pensation p

rogra

ms that

are

alig

ned w

ith t

he c

om

pany’s

ris

k

managem

ent

pro

file

. M

eets

with t

he

CR

O t

o a

ssess the e

ffectiveness o

f th

e d

esig

n a

nd o

pera

tion o

f th

e

com

pany’s

incentive c

om

pensation

pro

gra

ms in c

ontr

olli

ng e

xcessiv

e r

isk

takin

g.

Board

overs

ees e

nte

rprise

risks (

unle

ss t

he r

isk f

alls

w

ithin

the p

urv

iew

of

a

part

icula

r com

mitte

e).

Board

m

onitors

the “

tone a

t th

e t

op”

and c

ulture

of th

e c

om

pany,

overs

ees s

trate

gic

ris

ks

thro

ugh r

egula

r and

com

pre

hensiv

e r

evie

ws o

f th

e

com

pany’s

str

ate

gie

s a

nd

pla

ns a

nd r

evie

ws s

pecific

risks a

s n

eeded.

B

oard

appro

ves d

ecis

ions

regard

ing m

ajo

r str

ate

gic

in

itia

tives, such a

s

acquis

itio

ns a

nd d

ivestitu

res,

majo

r in

vestm

ents

, financin

gs

and c

apital com

mitm

ents

.

Yes.

The c

om

pany’s

E

RM

pro

cess is u

sed t

o

aggre

gate

, m

onitor,

m

easure

and m

anage

risks. T

he E

RM

appro

ach

is d

esig

ned to e

nable

the

board

to e

sta

blis

h a

m

utu

al unders

tandin

g

with m

anagem

ent

of th

e

eff

ectiveness o

f th

e

com

pany’s

ris

k

managem

ent

pra

ctices

and c

apabili

ties, to

re

vie

w t

he c

om

pany’s

risk e

xposure

and t

o

ele

vate

cert

ain

key r

isks

for

dis

cussio

n a

t th

e

board

level.

ER

M p

rogra

m is

overs

een b

y t

he C

RO

.

The E

RM

Polic

y d

efines

risk m

anagem

ent

obje

ctives,

risk a

ppetite

, risk lim

its a

nd e

scala

tion

trig

gers

, and e

sta

blis

hes

the inte

rnal govern

ance

str

uctu

re for

managin

g

Yes.

The C

RO

is

an e

xecutive

off

icer

and a

m

em

ber

of

senio

r m

anagem

ent.

R

eport

s to t

he

Audit a

nd R

isk

Com

mitte

e.

Managem

ent id

entifies

ente

rprise r

isks.

There

are

indiv

idual

managem

ent

com

mitte

es,

e.g

., E

RM

C

om

mitte

e,

chaired b

y

the C

RO

, and t

he

Asset-

Lia

bili

ty

Com

mitte

e,

chaired b

y

the C

FO

, w

hic

h a

re

responsib

le for

imple

menting t

he E

RM

P

olic

y a

cro

ss t

he

com

pany.

The A

udit a

nd R

isk

Com

mitte

e r

eceiv

es

regula

r re

port

s o

n r

isk

managem

ent fr

om

the

CR

O a

nd s

enio

r risk

leaders

in the a

reas o

f finance,

fundin

g a

nd

liquid

ity, com

plia

nce,

fraud,

technolo

gy a

nd

info

rmation s

ecurity

, and p

rivacy,

as w

ell

as

on r

isk m

anagem

ent

pra

ctices g

enera

lly.

Yes. S

ee “

Ris

ks

dele

gate

d t

o

com

mitte

es –

C

om

pensation

Com

mitte

e.”

al

ci

na

nif-n

on(

yn

ap

mo

C

)n

oitutit

sni

Fo

Chm

oC

R (Y

la

mo

r

?retr

ha

/te

et

mm

iksi

R

)N

Y /

om

c o

ff e

mn

au

de

ln

ci(

cot

de

at

gel

ed

ks

siR

of

on

ip

tri

cs

de

nd

ae

ettim

ms

eetti

mm

co

)s

ks

rid

eew

iv

erks

siR

t c

uo

thiw

le

ev

l

dar

ob

eh

tta

ttee

im

mco

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se

scu

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nt

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ge

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etn

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on

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sk

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la

nd

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de

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oh

nued

iinon

tc

he

tot

ng

iat

el

rs

ksi

and

rt

en

et

on

and

rit

ac

rtat

he

tsir

sder

ions

ee c

ttim

om

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and

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iat

spen

om

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bhe

tf

os

ee

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10 director notes the role of the board in risk oversight www.conferenceboard.org

Co

mp

an

y

(no

n-f

ina

ncia

l in

sti

tuti

on

)

Fo

rmal

Ris

k

Co

mm

itte

e/

Ch

art

er?

(Y

/ N

)

Ris

ks d

ele

gate

d t

o c

om

mit

tees

(in

clu

de n

am

e o

f co

mm

itte

e a

nd

d

es

cri

pti

on

of

risks)

Ris

ks r

evie

wed

at

the b

oard

le

vel

wit

ho

ut

co

mm

itte

e

Is “

en

terp

rise r

isk

man

ag

em

en

t”

dis

cu

ssed

?

If y

es,

ho

w?

Is t

here

a C

hie

f R

isk O

ffic

er?

If

yes, to

wh

om

d

oes h

e o

r sh

e

rep

ort

?

Ap

pro

ach

to

all

ocati

on

o

f ri

sk t

o m

an

ag

em

en

t

Co

mp

en

sati

on

ri

sk i

nclu

ded

in

g

en

era

l ri

sk

dis

cu

ssio

n?

If

yes,

ho

w?

co

ntin

ued

risks. T

he E

RM

Polic

y

focuses o

n t

he m

ajo

r risks that are

rele

vant to

th

e c

om

pany,

giv

en its

busin

ess m

odel: c

redit

risk (

institu

tional and

indiv

idual),

opera

tional

risk, m

ark

et

risk a

nd

reputa

tional risk.

See a

lso “

Is ‘ente

rprise

risk m

anagem

ent’

dis

cussed?”

No.

Audit C

om

mitte

e r

evie

ws a

nd

dis

cusses w

ith m

anagem

ent

the

com

pany’s

majo

r financia

l risk

exp

osure

s a

nd the s

teps

managem

ent

has taken t

o m

onitor

and c

ontr

ol such e

xposure

s, in

clu

din

g

the c

om

pany’s

ris

k a

ssessm

ent

and

risk m

anagem

ent

polic

ies.

Als

o

receiv

es r

egula

r re

port

s o

n c

om

ple

ted

inte

rnal audits o

f th

e fin

ancia

l,

opera

ting a

nd c

om

plia

nce r

isk a

reas.

Fin

ance/P

ensio

n C

om

mitte

e r

evie

ws

polic

ies d

esig

ned b

y m

anagem

ent

regard

ing f

inancia

l and m

ark

et

risk

and a

ctions taken b

y m

anagem

ent to

contr

ol th

e r

isk (

e.g

., the n

atu

re a

nd

exte

nt

of

insura

nce c

overa

ge,

inte

rest

rate

and f

ore

ign c

urr

ency e

xposure

, counte

rpart

y r

isk).

Board

overs

ees a

nd r

evie

ws

cert

ain

aspects

of th

e

com

pany’s

ris

k m

anagem

ent

eff

ort

s.

Annually

, th

e b

oard

revie

ws

the c

om

pany’s

str

ate

gic

busin

ess p

lans, w

hic

h

inclu

des e

valu

ating the

obje

ctives o

f and r

isks

associa

ted w

ith t

hese p

lans

(e.g

., c

om

petitive, te

chnolo

gy,

econom

ic).

Not

dis

cussed.

None s

pecifie

d,

but

dis

clo

sure

sta

tes t

hat

com

pany’s

chie

f audit e

xecutive

meets

annually

in

executive s

essio

n

with t

he A

udit

Com

mitte

e.

The

chie

f audit

executive r

evie

ws

with t

he A

udit

Com

mitte

e e

ach

year’s a

nnual

inte

rnal audit p

lan,

whic

h is focused

on s

ignific

ant

are

as o

f financia

l,

opera

ting a

nd

com

plia

nce r

isk.

Assessin

g a

nd

managin

g r

isk a

re t

he

responsib

ilities o

f th

e

managem

ent

of A

T&

T.

Mem

bers

of th

e

Fin

ance a

nd

Com

plia

nce g

roups a

re

responsib

le for

managin

g r

isk in t

heir

are

as a

nd r

eport

ing

regula

rly t

o t

he A

udit

Com

mitte

e.

No.

Yes.

Ente

rprise R

isk (

“ER

”) C

om

mitte

e (

1)

overs

ees s

enio

r m

anagem

ent’s

identification,

pla

nnin

g f

or

and

managem

ent

of m

ate

rial risks f

acin

g

the c

om

pany,

(2)

overs

ees

esta

blis

hm

ent

by m

anagem

ent

of

risk

polic

ies a

nd g

uid

elin

es a

nd s

yste

ms

to s

upport

contr

ol of m

ark

et,

inte

rest

rate

and liq

uid

ity r

isk,

(3)

revie

ws

managem

ent str

ate

gy,

polic

y

pro

cedure

for

managin

g m

ark

et

risk,

inte

rest ra

te r

isk, liq

uid

ity r

isk a

nd

reputa

tional risk a

nd (

4)

overs

ees

managem

ent

activitie

s w

ith r

espect

to

capital m

anagem

ent

and liq

uid

ity

Board

appro

ves c

om

pany’s

art

icula

tion o

f its r

isk a

ppetite

annually

and a

ppro

ves,

at

a

hig

h level, follo

win

g p

roposal

by m

anagem

ent, t

he

com

pany’s

fra

mew

ork

for

managin

g r

isk.

Yes, see “

Ris

ks

dele

gate

d t

o

com

mitte

es.”

A

udit,

Cre

dit a

nd E

R

com

mitte

es w

ork

in

tandem

to p

rovid

e

ente

rprise-w

ide o

vers

ight

of

risk.

Yes, th

e C

RO

is

responsib

le for

institu

ting r

isk

managem

ent

pra

ctices

consis

tent

with

overa

ll busin

ess

str

ate

gy a

nd r

isk

appetite

. R

eport

s

to C

EO

.

See “

Is there

a C

hie

f R

isk O

ffic

er?

”

GC

manages legal risk

and r

eport

s to C

EO

.

Corp

ora

te G

enera

l A

uditor

assesses t

he

com

pany’s

contr

ol

environm

ent

and is

independent

of

managem

ent.

Report

s

directly to A

udit

Com

mitte

e a

nd

adm

inis

tratively

to

Yes. S

ee “

Ris

ks

dele

gate

d t

o

com

mitte

es –

C

om

pensation

Com

mitte

e.”

al

ci

na

nif-n

on(

yn

ap

mo

C

)n

oitutit

sni

Fo

Chm

oC

R (Y

la

mo

r

?retr

ha

/te

et

mm

iksi

R

)N

Y /

om

c o

ff e

mn

au

de

ln

ci(

cot

de

at

gel

ed

ks

siR

of

on

ip

tri

cs

de

nd

ae

ettim

ms

eetti

mm

co

)s

ks

rid

eew

iv

erks

siR

t c

uo

thiw

le

ev

l

dar

ob

eh

tta

ttee

im

mco

?d

se

scu

sid

nt

em

ge

na

am

re

isrrp

etn

“e

Is

If?

wo

hs,

ye

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fC

hie

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sa

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App

endi

x 1

cont

inue

d

director notes the role of the board in risk oversight www.conferenceboard.org 11

Co

mp

an

y

(no

n-f

ina

ncia

l in

sti

tuti

on

)

Fo

rmal

Ris

k

Co

mm

itte

e/

Ch

art

er?

(Y

/ N

)

Ris

ks d

ele

gate

d t

o c

om

mit

tees

(in

clu

de n

am

e o

f co

mm

itte

e a

nd

d

es

cri

pti

on

of

risks)

Ris

ks r

evie

wed

at

the b

oard

le

vel

wit

ho

ut

co

mm

itte

e

Is “

en

terp

rise r

isk

man

ag

em

en

t”

dis

cu

ssed

?

If y

es,

ho

w?

Is t

here

a C

hie

f R

isk O

ffic

er?

If

yes, to

wh

om

d

oes h

e o

r sh

e

rep

ort

?

Ap

pro

ach

to

all

ocati

on

o

f ri

sk t

o m

an

ag

em

en

t

Co

mp

en

sati

on

ri

sk i

nclu

ded

in

g

en

era

l ri

sk

dis

cu

ssio

n?

If

yes,

ho

w?

co

ntin

ued

pla

nnin

g.

Cre

dit C

om

mitte

e (

1)

overs

ees c

redit

exp

osure

s o

n e

nte

rprise-w

ide b

asis

, (2

) overs

ees m

anagem

ent syste

ms

that support

measure

ment

and

contr

ol of cre

dit r

isk,

(3)

overs

ees

managem

ent’s r

esponse to tre

nds in

cre

dit r

isk a

nd (

4)

coord

inate

s the

overs

ight

of

cre

dit r

isk w

ith E

R

Com

mitte

e.

Com

pensation C

om

mitte

e (1

) m

eets

re

gula

rly w

ith s

enio

r risk o

ffic

ers

to

revie

w a

nd e

valu

ate

ris

k in e

mplo

yee

com

pensation p

rogra

ms a

nd (

2)

dis

cusses c

om

pensation r

isk f

or

purp

oses o

f cert

ifyin

g t

hat

com

pensation p

rogra

ms d

o n

ot

drive

inappro

priate

ris

ks t

o c

om

pany.

A

udit C

om

mitte

e (

1)

revie

ws w

ith

managem

ent

and t

he G

enera

l C

ounsel, the n

atu

re a

nd s

tatu

s o

f sig

nific

ant

legal m

att

ers

and legal

risks a

nd (

2)

coord

inate

s w

ith E

R

Com

mitte

e w

ith r

espect to

com

pany’s

overa

ll m

anagem

ent

and h

andlin

g o

f risk in o

rder

to a

ssis

t w

ith o

pera

tional

and legal/com

plia

nce r

isk.

CE

O.

No.

Audit C

om

mitte

e (

1)

dis

cusses the

com

pany’s

overa

ll risk a

ssessm

ent

and r

isk m

anagem

ent

pra

ctices, per

its c

hart

er,

(2)

perf

orm

s a

centr

al

overs

ight

role

with r

espect

to f

inancia

l and c

om

plia

nce r

isks a

nd (

3)

report

s

on its

fin

din

gs a

t each r

egula

rly

schedule

d m

eeting o

f th

e full

board

aft

er

meeting w

ith the S

VP

, O

ffic

e o

f In

tern

al G

overn

ance,

the C

orp

ora

te

Auditor

and the independent

auditor,

D

elo

itte

& T

ouche L

LP

.

Fin

ance C

om

mitte

e a

ssesses r

isks

rela

ted t

o c

apital str

uctu

re,

sig

nific

ant

Board

responsib

le for

consid

era

tion a

nd o

vers

ight

of

risks. R

egula

rly r

evie

ws

mate

rial str

ate

gic

, opera

tional, fin

ancia

l,

com

pensation a

nd

com

plia

nce r

isks w

ith s

enio

r m

anagem

ent

and in

conju

nction w

ith its

com

mitte

es.

Not

dis

cussed.

None s

pecifie

d.

Not

specifie

d.

No.

App

endi

x 1

cont

inue

d

12 director notes the role of the board in risk oversight www.conferenceboard.org

Co

mp

an

y

(no

n-f

ina

ncia

l in

sti

tuti

on

)

Fo

rmal

Ris

k

Co

mm

itte

e/

Ch

art

er?

(Y

/ N

)

Ris

ks d

ele

gate

d t

o c

om

mit

tees

(in

clu

de n

am

e o

f co

mm

itte

e a

nd

d

es

cri

pti

on

of

risks)

Ris

ks r

evie

wed

at

the b

oard

le

vel

wit

ho

ut

co

mm

itte

e

Is “

en

terp

rise r

isk

man

ag

em

en

t”

dis

cu

ssed

?

If y

es,

ho

w?

Is t

here

a C

hie

f R

isk O

ffic

er?

If

yes, to

wh

om

d

oes h

e o

r sh

e

rep

ort

?

Ap

pro

ach

to

all

ocati

on

o

f ri

sk t

o m

an

ag

em

en

t

Co

mp

en

sati

on

ri

sk i

nclu

ded

in

g

en

era

l ri

sk

dis

cu

ssio

n?

If

yes,

ho

w?

co

ntin

ued

financia

l exposure

s,

risk m

anagem

ent

and m

ajo

r in

sura

nce p

rogra

ms,

em

plo

yee p

ensio

n p

lan p

olic

ies a

nd

perf

orm

ance a

nd r

egula

rly e

valu

ate

s

financia

l risks a

ssocia

ted w

ith s

uch

pro

gra

ms.

No.

Audit C

om

mitte

e r

evie

ws t

he

com

pany’s

ris

k a

ssessm

ent

and r

isk

managem

ent

polic

ies a

nd p

rocedure

s

at

least

annually

, in

clu

din

g its

majo

r financia

l risk e

xposure

s a

nd s

teps

taken to m

onitor

and c

ontr

ol such

exp

osure

s.

Com

pensation C

om

mitte

e r

evie

ws

risks c

reate

d b

y c

om

pensation p

lans.

The r

isk o

vers

ight fu

nction is

adm

inis

tere

d b

oth

in full

board

dis

cussio

ns a

nd in

indiv

idual com

mitte

es that

are

ta

sked b

y the b

oard

with

overs

ight

of

specific

ris

ks.

Board

overs

ees e

nte

rprise

risk a

s p

art

of its r

ole

in

revie

win

g a

nd o

vers

eein

g t

he

imple

menta

tion o

f th

e

com

pany’s

str

ate

gic

pla

ns

and o

bje

ctives.

Board

and its

com

mitte

es

regula

rly r

eceiv

e info

rmation

and r

eport

s fro

m

managem

ent

on t

he s

tatu

s o

f th

e c

om

pany a

nd t

he r

isks

associa

ted w

ith t

he

com

pany’s

str

ate

gy a

nd

busin

ess p

lans.

Yes. S

ee “

Ris

ks r

evie

wed

at

the b

oard

level w

ithout

com

mitte

e.”

None s

pecifie

d.

Not

specifie

d.

See “

Ris

ks

dele

gate

d t

o

com

mitte

es –

C

om

pensation

Com

mitte

e.”

No.

Audit C

om

mitte

e a

ssis

ts b

oard

in

monitoring the c

om

pany’s

ris

k

exp

osure

and d

evelo

pin

g g

uid

elin

es

and p

olic

ies to g

overn

pro

cesses for

managin

g r

isks a

nd d

iscusses its

polic

ies w

ith r

espect to

ris

k

assessm

ent

and r

isk m

anagem

ent in

th

e c

onte

xt

of com

plia

nce a

nd

inte

rnal contr

ols

. R

eceiv

es a

nnual

report

s f

rom

the c

om

pany’s

Tre

asury

D

epart

ment.

Board

Nom

inating a

nd G

overn

ance

Com

mitte

e a

ssis

ts b

oard

in

monitoring r

isks incid

ent to

the

com

pany’s

govern

ance s

tructu

res

Board

revie

ws p

ort

folio

, capital allo

cation a

nd

geopolit

ical risks in t

he

conte

xt

of its a

nnual str

ate

gy

sessio

n a

nd t

he a

nnual

busin

ess p

lan a

nd c

apital

budget

revie

w.

B

oard

receiv

es r

outine

report

s f

rom

managem

ent

on

risk m

att

ers

in t

he c

onte

xt

of

the c

om

pany’s

str

ate

gic

, busin

ess a

nd o

pera

tional

pla

nnin

g a

nd d

ecis

ion

makin

g.

Not

dis

cussed.

None s

pecifie

d.

Managem

ent m

anages

and m

onitors

ris

ks a

t all

levels

of th

e c

om

pany,

inclu

din

g o

pera

ting

com

panie

s, busin

ess

units, corp

ora

te

depart

ments

and

serv

ice c

om

panie

s, and

regula

rly r

eport

s t

o t

he

board

thro

ugh

pre

senta

tions fro

m

various c

ente

rs o

f m

anagem

ent le

vel risk

exp

ert

ise, in

clu

din

g

Corp

ora

te S

trate

gic

P

lannin

g,

Legal,

Yes. S

ee “

Ris

ks

dele

gate

d t

o

com

mitte

es –

M

anagem

ent

Com

pensation

Com

mitte

e.”

App

endi

x 1

cont

inue

d

director notes the role of the board in risk oversight www.conferenceboard.org 13

Co

mp

an

y

(no

n-f

ina

ncia

l in

sti

tuti

on

)

Fo

rmal

Ris

k

Co

mm

itte

e/

Ch

art

er?

(Y

/ N

)

Ris

ks d

ele

gate

d t

o c

om

mit

tees

(in

clu

de n

am

e o

f co

mm

itte

e a

nd

d

es

cri

pti

on

of

risks)

Ris

ks r

evie

wed

at

the b

oard

le

vel

wit

ho

ut

co

mm

itte

e

Is “

en

terp

rise r

isk

man

ag

em

en

t”

dis

cu

ssed

?

If y

es,

ho

w?

Is t

here

a C

hie

f R

isk O

ffic

er?

If

yes, to

wh

om

d

oes h

e o

r sh

e

rep

ort

?

Ap

pro

ach

to

all

ocati

on

o

f ri

sk t

o m

an

ag

em

en

t

Co

mp

en

sati

on

ri

sk i

nclu

ded

in

g

en

era

l ri

sk

dis

cu

ssio

n?

If

yes,

ho

w?

co

ntin

ued

and p

rocesses. In

connection w

ith a

n

annual evalu

ation o

f th

e c

om

pany’s

govern

ance p

ractices,

the C

om

mitte

e

dis

cusses r

isk m

anagem

ent

in the

conte

xt

of

genera

l govern

ance

matt

ers

, in

clu

din

g a

mong o

ther

topic

s,

board

and m

anagem

ent

successio

n p

lannin

g,

dele

gations o

f auth

ority

and inte

rnal appro

val

pro

cesses, sto

ckhold

er

pro

posals

and

activis

m,

and D

&O

lia

bili

ty insura

nce.

Public

Polic

y C

om

mitte

e a

ssis

ts

board

in m

onitoring r

isks a

ssocia

ted

with t

he c

om

pany’s

role

in the

com

munitie

s in w

hic

h it

opera

tes.

Routinely

dis

cusses r

isk m

anagem

ent

in t

he c

onte

xt

of,

am

ong o

ther

thin

gs,

legis

lative initia

tives,

environm

enta

l ste

ward

ship

, em

plo

yee r

ela

tions,

govern

ment

and n

ongovern

ment

org

aniz

ation r

ela

tions a

nd t

he

com

pany’s

reputa

tion.

Managem

ent

Com

pensation

Com

mitte

e a

ssis

ts b

oard

in

monitoring r

isks a

ssocia

ted w

ith

com

pensation p

rogra

ms a

nd

pra

ctices. A

ssis

ted b

y its

ow

n

independent

com

pensation

consultant.

Annually

revie

ws t

he

desig

n a

nd g

oals

of com

pensation

pro

gra

ms a

nd p

ractices in the c

onte

xt

of

possib

le r

isks to the c

om

pany’s

financia

l and r

eputa

tional w

ell-

bein

g.

Corp

ora

te C

om

plia

nce,

Health E

nvironm

ent

and S

afe

ty,

Glo

bal

Explo

ration a

nd

Reserv

es,

Corp

ora

tion

Fin

ance,

and o

thers

.

P

roxy

filin

g pr

eced

es e

ffect

ive

date

of n

ew S

EC

di

sclo

sure

rule

s.

No.

Fin

ance C

om

mitte

e r

evie

ws

insura

nce r

isk m

anagem

ent

polic

ies

and e

quity r

isk m

anagem

ent

polic

ies

and p

rogra

ms.

Com

pensation C

om

mitte

e r

evie

ws

com

pensation r

isk.

Not

dis

cussed.

Not

dis

cussed.

Not

dis

cussed.

Not

dis

cussed.

Yes.

Dis

clo

sure

in

clu

des

sta

tem

ent th

at

sto

ck o

wners

hip

guid

elin

es for

executive o

ffic

ers

and d

irecto

rs

dis

coura

ge

excess a

nd

unnecessary

ris

k

takin

g.

App

endi

x 1

cont

inue

d

14 director notes the role of the board in risk oversight www.conferenceboard.org

Co

mp

an

y

(no

n-f

ina

ncia

l in

sti

tuti

on

)

Fo

rmal

Ris

k

Co

mm

itte

e/

Ch

art

er?

(Y

/ N

)

Ris

ks d

ele

gate

d t

o c

om

mit

tees

(in

clu

de n

am

e o

f co

mm

itte

e a

nd

d

es

cri

pti

on

of

risks)

Ris

ks r

evie

wed

at

the b

oard

le

vel

wit

ho

ut

co

mm

itte

e

Is “

en

terp

rise r

isk

man

ag

em

en

t”

dis

cu

ssed

?

If y

es,

ho

w?

Is t

here

a C

hie

f R

isk O

ffic

er?

If

yes, to

wh

om

d

oes h

e o

r sh

e

rep

ort

?

Ap

pro

ach

to

all

ocati

on

o

f ri

sk t

o m

an

ag

em

en

t

Co

mp

en

sati

on

ri

sk i

nclu

ded

in

g

en

era

l ri

sk

dis

cu

ssio

n?

If

yes,

ho

w?

P

roxy

filin

g pr

eced

es e

ffect

ive

date

of n

ew S

EC

di

sclo

sure

rule

s.

cont

inue

d

The c

om

pany’s

executive

com

pensation is

str

uctu

red to

pre

vent

inappro

priate

ris

k

takin

g b

y

executives.

The

Com

pensation

Com

mitte

e

belie

ves t

hat th

e

focus o

n

world

wid

e

revenue a

nd

opera

ting incom

e

gro

wth

as the

perf

orm

ance

targ

ets

encoura

ges

managem

ent to

ta

ke a

bala

nced

appro

ach t

hat

focuses o

n

corp

ora

te

pro

fita

bili

ty.

Yes.

Ris

k M

anagem

ent

and F

inance

Com

mitte

e e

nhances the b

oard

’s

overs

ight

of

risk m

anagem

ent.

R

esponsib

ilities inclu

de (

1)

revie

win

g

risk m

anagem

ent

and c

om

plia

nce

polic

ies a

nd p

rogra

ms for,

and

report

s o

n,

the c

om

pany a

nd its

subsid

iaries,

(2)

appro

vin

g a

nd

adju

sting r

isk lim

its s

ubje

ct to

ra

tification b

y t

he b

oard

and (

3)

consultin

g w

ith m

anagem

ent

on t

he

eff

ectiveness o

f risk identification,

measure

ment

and m

onitoring

pro

cesses a

nd t

he a

dequacy o

f sta

ffin

g a

nd a

ction p

lans, as n

eeded.

Com

pensation C

om

mitte

e r

evie

ws

com

pensation p

rogra

ms to e

nsure

th

at th

ey d

o n

ot, a

mong o

ther

thin

gs,

Board

overs

ees t

he

com

pany’s

glo

bal risk

managem

ent fr

am

ew

ork

.

Board

receiv

es a

ris

k r

eport

fr

om

the C

RO

at

each

regula

rly s

chedule

d b

oard

m

eeting, w

ith r

espect to

the

com

pany’s

appro

ach to

managem

ent

of m

ajo

r risks,

inclu

din

g m

anagem

ent’s r

isk

mitig

ation e

ffort

s, w

here

appro

priate

.

Yes.

Ris

k M

anagem

ent

and F

inance C

om

mitte

e

report

s t

o t

he b

oard

re

gard

ing t

he c

om

pany’s

risk p

rofile

, as w

ell

as its

E

RM

fra

mew

ork

in

clu

din

g the s

ignific

ant

polic

ies, pro

cedure

s a

nd

pra

ctices e

mplo

yed to

manage r

isks in t

he

com

pany’s

busin

esses.

Yes.

The C

RO

le

ads G

lobal R

isk

Managem

ent,

a

com

pany-w

ide

function t

hat

is

responsib

le for

an

inte

gra

ted e

ffort

to

identify

, assess

and m

anage r

isks

that m

ay a

ffect th

e

com

pany’s

abili

ty

to e

xecute

on its

corp

ora

te s

trate

gy

and f

ulfill

its

busin

ess

obje

ctives.

Report

s p

rim

arily

to

the b

oard

. S

ee

“Ris

ks r

evie

wed a

t

Managem

ent is

re

sponsib

le for

executing t

he

com

pany’s

ris

k

managem

ent

polic

ies.

See “

Is there

a C

hie

f R

isk O

ffic

er?

”

Yes. S

ee “

Ris

ks

dele

gate

d t

o

com

mitte

es –

T

he

Com

pensation

Com

mitte

e.”

App

endi

x 1

cont

inue

d

director notes the role of the board in risk oversight www.conferenceboard.org 15

Co

mp

an

y

(no

n-f

ina

ncia

l in

sti

tuti

on

)

Fo

rmal

Ris

k

Co

mm

itte

e/

Ch

art

er?

(Y

/ N

)

Ris

ks d

ele

gate

d t

o c

om

mit

tees

(in

clu

de n

am

e o

f co

mm

itte

e a

nd

d

es

cri

pti

on

of

risks)

Ris

ks r

evie

wed

at

the b

oard

le

vel

wit

ho

ut

co

mm

itte

e

Is “

en

terp

rise r

isk

man

ag

em

en

t”

dis

cu

ssed

?

If y

es,

ho

w?

Is t

here

a C

hie

f R

isk O

ffic

er?

If

yes, to

wh

om

d

oes h

e o

r sh

e

rep

ort

?

Ap

pro

ach

to

all

ocati

on

o

f ri

sk t

o m

an

ag

em

en

t

Co

mp

en

sati

on

ri

sk i

nclu

ded

in

g

en

era

l ri

sk

dis

cu

ssio

n?

If

yes,

ho

w?

co

ntin

ued

encoura

ge u

nnecessary

or

excessiv

e

risk-t

akin

g.

the b

oard

level

without

com

mitte

e.”

No.

Board

im

ple

ments

ris

k o

vers

ight

function b

oth

as a

whole

and t

hro

ugh

com

mitte

es.

Audit C

om

mitte

e o

vers

ees r

isks

rela

ted t

o the c

om

pany’s

fin

ancia

l sta

tem

ents

, th

e f

inancia

l re

port

ing

pro

cess, accounting a

nd legal

matt

ers

. O

vers

ees t

he inte

rnal audit

function a

nd the c

om

pany’s

eth

ics

pro

gra

ms, in

clu

din

g t

he C

ode o

f B

usin

ess C

onduct.

Com

pensation C

om

mitte

e e

valu

ate

s

the r

isks a

nd r

ew

ard

s a

ssocia

ted w

ith

the c

om

pany’s

com

pensation

philo

sophy a

nd p

rogra

ms.

Revie

ws

and a

ppro

ves c

om

pensation

pro

gra

ms w

ith f

eatu

res that m

itig

ate

risk w

ithout

dim

inis

hin

g t

he incentive

natu

re o

f th

e c

om

pensation.

Fin

ance C

om

mitte

e o

vers

ees c

ert

ain

financia

l m

att

ers

and r

isks r

ela

ting t

o

pensio

n p

lan investm

ents

, curr

ency

risk a

nd h

edgin

g p

rogra

ms, m

erg

ers

and a

cquis

itio

ns a

nd c

apital pro

jects

.

Public

Issues a

nd D

ivers

ity R

evie

w

Com

mitte

e o

vers

ees issues t

hat

could

pose s

ignific

ant

reputa

tional

risk t

o t

he c

om

pany.

Managem

ent

Develo

pm

ent

Com

mitte

e o

vers

ees m

anagem

ent

develo

pm

ent

and s

uccessio

n

pla

nnin

g a

cro

ss s

enio

r m

anagem

ent

positio

ns.

Board

seeks t

o u

nders

tand

and o

vers

ee c

ritical busin

ess

risks. R

isks a

re c

onsid

ere

d in

virtu

ally

every

busin

ess

decis

ion a

nd a

s p

art

of

the

com

pany’s

busin

ess s

trate

gy.

Eff

ective r

isk o

vers

ight

is a

n

import

ant

priority

of

the

board

. T

he b

oard

has

imple

mente

d a

ris

k

govern

ance f

ram

ew

ork

to

unders

tand c

ritical risks in the

com

pany’s

busin

ess a

nd

str

ate

gy; allo

cate

re

sponsib

ilities for

risk

overs

ight

am

ong t

he full

board

and its

com

mitte

es;

evalu

ate

the c

om

pany’s

ris

k

managem

ent

pro

cesses a

nd

see t

hat th

ey a

re f

unctionin

g

adequate

ly;

facili

tate

open

com

munic

ation b

etw

een

managem

ent

and d

irecto

rs;

and f

oste

r an a

ppro

priate

culture

of

inte

grity

and r

isk

aw

are

ness.

A

nnually

, at

least

one

meeting o

f th

e b

oard

is

dedic

ate

d p

rim

arily

to

evalu

ating a

nd d

iscussin

g

risk,

risk m

itig

ation s

trate

gie

s

and t

he c

om

pany’s

inte

rnal

contr

ol environm

ent.

T

opic

s

inclu

de fin

ancia

l risks,

polit

ical and r

egula

tory

ris

ks,

legal risks, supply

chain

and

qualit

y r

isks, in

form

ation

technolo

gy r

isks, econom

ic

risks a

nd r

isks r

ela

ted t

o t

he

com

pany’s

tra

nsfo

rmation

Yes.

The c

om

pany h

as

robust

inte

rnal pro

cesses

and a

str

ong inte

rnal

contr

ol environm

ent to

id

entify

and m

anage

risks a

nd t

o

com

munic

ate

with t

he

board

, in

clu

din

g a

n E

RM

pro

gra

m.

No.

The R

isk

Managem

ent

Com

mitte

e is

cochaired b

y the

CF

O a

nd t

he G

C.

The c

om

pany h

as

robust

inte

rnal

pro

cesses a

nd a

str

ong

inte

rnal contr

ol

environm

ent

to identify

and m

anage r

isks a

nd

to c

om

munic

ate

with

the b

oard

. T

hese

inclu

de a

n e

nte

rprise

risk m

anagem

ent

pro

gra

m, a r

isk

managem

ent

com

mitte

e c

ochaired b

y

the C

FO

and t

he G

C,

regula

r in

tern

al

managem

ent

dis

clo

sure

com

mitte

e

meetings,

Code o

f B

usin

ess C

onduct,

robust

pro

duct

qualit

y

sta

ndard

s a

nd

pro

cesses,

a s

trong

eth

ics a

nd c

om

plia

nce

off

ice a

nd a

com

pre

hensiv

e inte

rnal

and e

xte

rnal audit

pro

cess.

Yes. S

ee “

Ris

ks

dele

gate

d t

o

com

mitte

es –

C

om

pensation

Com

mitte

e.”

App

endi

x 1

cont

inue

d

16 director notes the role of the board in risk oversight www.conferenceboard.org

Co

mp

an

y

(no

n-f

ina

ncia

l in

sti

tuti

on

)

Fo

rmal

Ris

k

Co

mm

itte

e/

Ch

art

er?

(Y

/ N

)

Ris

ks d

ele

gate

d t

o c

om

mit

tees

(in

clu

de n

am

e o

f co

mm

itte

e a

nd

d

es

cri

pti

on

of

risks)

Ris

ks r

evie

wed

at

the b

oard

le

vel

wit

ho

ut

co

mm

itte

e

Is “

en

terp

rise r

isk

man

ag

em

en

t”

dis

cu

ssed

?

If y

es,

ho

w?

Is t

here

a C

hie

f R

isk O

ffic

er?

If

yes, to

wh

om

d

oes h

e o

r sh

e

rep

ort

?

Ap

pro

ach

to

all

ocati

on

o

f ri

sk t

o m

an

ag

em

en

t

Co

mp

en

sati

on

ri

sk i

nclu

ded

in

g

en

era

l ri

sk

dis

cu

ssio

n?

If

yes,

ho

w?

co

ntin

ued

eff

ort

s. T

he b

oard

als

o

dis

cusses r

isk t

hro

ughout th

e

year

in r

ela

tion to s

ignific

ant

risks a

nd s

pecific

pro

posed

actions.

No.

Each c

om

mitte

e p

lays a

key r

ole

in

overs

eein

g t

he c

om

pany’s

m

anagem

ent

of

risks w

ithin

the

com

mitte

e’s

are

a o

f fo

cus.

Com

pensation C

om

mitte

e o

vers

ees

managem

ent

of

risks r

ela

ting to

executive c

om

pensation p

ractices.

Audit C

om

mitte

e o

vers

ees

managem

ent

of

accounting,

auditin

g,

exte

rnal re

port

ing a

nd inte

rnal contr

ol

risks.

Corp

ora

te G

overn

ance C

om

mitte

e

addre

sses r

isks a

ssocia

ted w

ith

directo

r in

dependence a

nd p

ote

ntial

conflic

ts o

f in

tere

st.

Environm

enta

l P

olic

y C

om

mitte

e

focuses o

n r

isks a

ssocia

ted w

ith

em

erg

ing r

egula

tory

develo

pm

ents

re

late

d t

o the e

nvironm

ent.

Scie

nce a

nd T

echnolo

gy C

om

mitte

e

consid

ers

key r

esearc

h a

nd

develo

pm

ent

initia

tives a

nd the r

isks

rela

ted t

o those p

rogra

ms.

Board

regula

rly r

evie

ws a

nd

dis

cusses w

ith m

em

bers

of

managem

ent in

form

ation

regard

ing t

he c

om

pany’s

busin

ess d

isru

ption,

econom

ic,

environm

enta

l,

legal, r

egula

tory

, re

puta

tional,

str

ate

gic

, te

chnolo

gic

al and

oth

er

risks, th

eir p

ote

ntial

impact

and the c

om

pany’s

risk m

itig

ation e

ffort

s.

Board

regula

rly info

rmed b

y

its c

om

mitte

es a

bout

rele

vant

risks, enablin

g the b

oard

to

coord

inate

ris

k o

vers

ight

and

rela

tionship

s a

mong t

he

various r

isks.

Not

dis

cussed.

None s

pecifie

d.

Not

specifie

d.

Yes. S

ee “

Ris

ks

dele

gate

d t

o

com

mitte

es –

C

om

pensation

Com

mitte

e.”

No.

Audit C

om

mitte

e o

vers

ees r

isks

associa

ted w

ith f

inancia

l and

accounting m

att

ers

, in

clu

din

g

com

plia

nce w

ith legal and r

egula

tory

re

quirem

ents

, and the c

om

pany’s

financia

l re

port

ing a

nd inte

rnal contr

ol

syste

ms.

Board

Aff

airs C

om

mitte

e o

vers

ees

risks a

ssocia

ted w

ith c

orp

ora

te

govern

ance,

inclu

din

g b

oard

str

uctu

re

Responsib

ility

for

risk

overs

ight

rests

with t

he

board

. C

om

mitte

es h

elp

the

board

carr

y o

ut th

is

responsib

ility

by focusin

g o

n

specific

key a

reas o

f risk

inhere

nt

in the b

usin

ess.

Board

receiv

es r

egula

r update

s fro

m the c

om

mitte

es

and a

t le

ast

annually

Not

dis

cussed.

None s

pecifie

d.

Not

specifie

d.

Yes. S

ee “

Ris

ks

dele

gate

d t

o

com

mitte

es –

C

om

pensation

Com

mitte

e.”

App

endi

x 1

cont

inue

d

director notes the role of the board in risk oversight www.conferenceboard.org 17

Co

mp

an

y

(no

n-f

ina

ncia

l in

sti

tuti

on

)

Fo

rmal

Ris

k

Co

mm

itte

e/

Ch

art

er?

(Y

/ N

)

Ris

ks d

ele

gate

d t

o c

om

mit

tees

(in

clu

de n

am

e o

f co

mm

itte

e a

nd

d

es

cri

pti

on

of

risks)

Ris

ks r

evie

wed

at

the b

oard

le

vel

wit

ho

ut

co

mm

itte

e

Is “

en

terp

rise r

isk

man

ag

em

en

t”

dis

cu

ssed

?

If y

es,

ho

w?

Is t

here

a C

hie

f R

isk O

ffic

er?

If

yes, to

wh

om

d

oes h

e o

r sh

e

rep

ort

?

Ap

pro

ach

to

all

ocati

on

o

f ri

sk t

o m

an

ag

em

en

t

Co

mp

en

sati

on

ri

sk i

nclu

ded

in

g

en

era

l ri

sk

dis

cu

ssio

n?

If

yes,

ho

w?

co

ntin

ued

and d

irecto

r successio

n p

lannin

g.

Com

pensation C

om

mitte

e h

elp

s

ensure

that

the c

om

pany’s

com

pensation p

olic

ies a

nd p

ractices

support

the r

ete

ntion a

nd

develo

pm

ent

of

executive t

ale

nt

with

the e

xperience r

equired t

o m

anage

risks inhere

nt

to t

he b

usin

ess a

nd d

o

not

encoura

ge o

r re

ward

excessiv

e

risk-t

akin

g b

y e

xecutives.

Fin

ance C

om

mitte

e o

vers

ees r

isks

associa

ted w

ith f

inancia

l in

str

um

ents

, financia

l polic

ies a

nd s

trate

gie

s a

nd

capital str

uctu

re.

Public

Issues a

nd C

ontr

ibutions

Com

mitte

e o

vers

ees o

pera

tional risks

such a

s t

hose r

ela

ting t

o e

mplo

yee

and c

om

munity s

afe

ty,

health,

environm

enta

l and s

ecurity

matt

ers

.

part

icip

ate

s in r

evie

ws w

ith

managem

ent

addre

ssin

g t

he

pro

gre

ss o

f sig

nific

ant

pro

jects

and o

pera

tional

activitie

s.

Update

s a

re

measure

d a

gain

st

benchm

ark

exp

ecta

tions, all

of

whic

h

reflect

identified r

isk facto

rs

and t

he im

pact

of

those

identified r

isks o

n e

xpecte

d

outc

om

es a

nd r

esults.

No.

Responsib

ility

for

the o

vers

ight

of

specific

ris

ks h

as b

een d

ele

gate

d to

board

com

mitte

es.

Audit C

om

mitte

e o

vers

ees r

isk

polic

ies a

nd p

rocesses r

ela

ting t

o t

he

financia

l sta

tem

ents

and fin

ancia

l re

port

ing p

rocesses,

as w

ell

as k

ey

cre

dit,

liquid

ity,

and m

ark

et

risks a

nd

com

plia

nce,

and t

he g

uid

elin

es,

polic

ies a

nd p

rocesses f

or

monitoring

and r

eport

ing.

Public

Responsib

ilities C

om

mitte

e

overs

ees r

isks r

ela

ted t

o p

ublic

polic

y

initia

tives, th

e e

nvironm

ent

and

sim

ilar

matt

ers

. M

anagem

ent

Develo

pm

ent

and

Com

pensation C

om

mitte

e m

onitors

risks a

ssocia

ted w

ith m

anagem

ent

resourc

es, str

uctu

re a

nd s

uccessio

n

pla

nnin

g.

Board

has o

vera

ll re

sponsib

ility

for

risk

overs

ight

with f

ocus o

n m

ost

sig

nific

ant

risks facin

g t

he

com

pany.

At

year-

end, m

anagem

ent

and t

he b

oard

join

tly d

evelo

p

a lis

t of m

ajo

r risks to

prioritize in the n

ext

year.

T

he b

oard

and its

com

mitte

es

dedic

ate

a p

ort

ion o

f th

eir

meetings t

o r

evie

w a

nd

dis

cuss s

pecific

ris

k topic

s in

more

deta

il.

Str

ate

gic

and o

pera

tional

risks a

re p

resente

d a

nd

dis

cussed in t

he c

onte

xt

of

the C

EO

’s r

eport

on

opera

tions to t

he b

oard

and

regula

rly s

chedule

d m

eetings.

Yes.

The C

RO

overs

ees

and c

oord

inate

s r

isk

assessm

ent

and

mitig

ation o

n a

n

ente

rprise-w

ide b

asis

.

Yes.

The C

RO

le

ads the

Corp

ora

te R

isk

Function,

whic

h

identifies k

ey

busin

ess r

isks,

ensuring

appro

priate

m

anagem

ent

of

these r

isks w

ithin

sta

ted lim

its a

nd

enfo

rcem

ent

thro

ugh p

olic

ies

and p

rocedure

s.

R

eport

s to t

he

Corp

ora

te R

isk

Com

mitte

e,

a

managem

ent

com

mitte

e

com

posed o

f th

e

Chairm

an a

nd

CE

O a

nd o

ther

See “

Is t

here

a C

hie

f

Ris

k O

ffic

er ?

”

In a

dditio

n, th

e P

olic

y

Com

plia

nce R

evie

w

Board

, w

hic

h m

eets

betw

een 1

2 a

nd 1

4

tim

es a

year

is c

haired

by t

he G

C a

nd inclu

des

the C

FO

and o

ther

senio

r le

vel fu

nctional

leaders

.

Yes. S

ee “

Ris

ks

dele

gate

d t

o

com

mitte

es

Managem

ent

Develo

pm

ent and

Com

pensation

Com

mitte

e.”

App

endi

x 1

cont

inue

d

18 director notes the role of the board in risk oversight www.conferenceboard.org

Co

mp

an

y

(no

n-f

ina

ncia

l in

sti

tuti

on

)

Fo

rmal

Ris

k

Co

mm

itte

e/

Ch

art

er?

(Y

/ N

)

Ris

ks d

ele

gate

d t

o c

om

mit

tees

(in

clu

de n

am

e o

f co

mm

itte

e a

nd

d

es

cri

pti

on

of

risks)

Ris

ks r

evie

wed

at

the b

oard

le

vel

wit

ho

ut

co

mm

itte

e

Is “

en

terp

rise r

isk

man

ag

em

en

t”

dis

cu

ssed

?

If y

es,

ho

w?

Is t

here

a C

hie

f R

isk O

ffic

er?

If

yes, to

wh

om

d

oes h

e o

r sh

e

rep

ort

?

Ap

pro

ach

to

all

ocati

on

o

f ri

sk t

o m

an

ag

em

en

t

Co

mp

en

sati

on

ri

sk i

nclu

ded

in

g

en

era

l ri

sk

dis

cu

ssio

n?

If

yes,

ho

w?

co

ntin

ued

Nom

inating a

nd C

orp

ora

te

Govern

ance C

om

mitte

e o

vers

ees

risks r

ela

ting to g

overn

ance s

tructu

re

and p

rocesses a

nd r

isks a

risin

g f

rom

re

late

d-p

ers

on t

ransactions.

senio

r le

vel

busin

ess leaders

.

The C

orp

ora

te

Ris

k C

om

mitte

e

report

s t

o t

he

board

.

No.

Audit C

om

mitte

e r

egula

rly r

eceiv

es,

revie

ws a

nd d

iscusses w

ith

managem

ent

pre

senta

tions a

nd

analy

ses,

the c

om

pany’s

aggre

gate

risk e

xposure

s,

inclu

din

g m

ark

et,

cre

dit a

nd o

pera

tional risks a

nd k

ey

info

rmation involv

ing t

he c

om

pany’s

fu

ndin

g a

nd liq

uid

ity r

isk p

ositio

n.

Audit C

om

mitte

e inte

racts

fre

quently

with t

he C

RO

and o

ther

key r

isk

managem

ent

executives, fr

om

both

th

e c

ontr

ol and b

usin

ess s

ides o

f th

e

firm

.

The b

oard

’s o

vers

ight

of th

e

com

pany’s

ris

k m

anagem

ent

pro

cess is e

ffecte

d p

rim

arily

th

rough t

he A

udit C

om

mitte

e.

The b

oard

revie

ws t

he

com

pany’s

str

ate

gy,

whic

h

bols

ters

its

abili

ty t

o o

vers

ee

the c

om

pany’s

ris

k

managem

ent

pro

cess.

Not

dis

cussed.

Yes.

The C

RO

is

responsib

le for

leadin

g t

he

com

pany’s

overa

ll risk m

anagem

ent

eff

ort

. In

tera

cts

fr

equently w

ith

Audit C

om

mitte

e

and

Com

pensation

Com

mitte

e.

Report

s to A

udit

Com

mitte

e.

See “

Is there

a C

hie

f R

isk O

ffic

er?

” Y

es.

The

com

pany r

evie

ws

its f

irm

-wid

e

com

pensation

pro

gra

ms a

nd

polic

ies to e

nsure

th

at th

ere

are

no

risks a

risin

g f

rom

such p

rogra

ms

and p

olic

ies that

are

reasonably

lik

ely

to h

ave a

m

ate

rial advers

e

eff

ect

on t

he f

irm

. T

he C

RO

, th

e

com

pany’s

in

dependent

com

pensation

consultant

and

senio

r m

em

bers

of

both

the

revenue a

nd

contr

ol div

isio

ns

are

involv

ed in

this

revie

w

pro

cess. In

additio

n, th

e

com

pany’s

C

om

pensation

Com

mitte

e

revie

ws t

he

com

pany’s

com

pensation

pro

gra

ms f

or

consis

tency w

ith

the s

afe

ty a

nd

soundness o

f our

firm

. S

ince t

he

Com

pensation

App

endi

x 1

cont

inue

d

director notes the role of the board in risk oversight www.conferenceboard.org 19

Co

mp

an

y

(no

n-f

ina

ncia

l in

sti

tuti

on

)

Fo

rmal

Ris

k

Co

mm

itte

e/

Ch

art

er?

(Y

/ N

)

Ris

ks d

ele

gate

d t

o c

om

mit

tees

(in

clu

de n

am

e o

f co

mm

itte

e a

nd

d

es

cri

pti

on

of

risks)

Ris

ks r

evie

wed

at

the b

oard

le

vel

wit

ho

ut

co

mm

itte

e

Is “

en

terp

rise r

isk

man

ag

em

en

t”

dis

cu

ssed

?

If y

es,

ho

w?

Is t

here

a C

hie

f R

isk O

ffic

er?

If

yes, to

wh

om

d

oes h

e o

r sh

e

rep

ort

?

Ap

pro

ach

to

all

ocati

on

o

f ri

sk t

o m

an

ag

em

en

t

Co

mp

en

sati

on

ri

sk i

nclu

ded

in

g

en

era

l ri

sk

dis

cu

ssio

n?

If

yes,

ho

w?

co

ntin

ued

Com

mitte

e

inclu

des a

ll of

the

mem

bers

of th

e

Audit C

om

mitte

e,

it is p

rovid

ed w

ith

a c

om

ple

te

pic

ture

of th

e r

isk

managem

ent

pro

cess.

P

roxy

filin

g pr

eced

es e

ffect

ive

date

of n

ew S

EC

di

sclo

sure

rule

s.

No.

Audit C

om

mitte

e a

ssis

ts w

ith r

isk

assessm

ent

and r

isk m

anagem

ent.

Fin

ance a

nd I

nvestm

ent

Com

mitte

e

revie

ws r

isk c

oncentr

ation.

Not

dis

cussed.

Not

dis

cussed.

Not

dis

cussed.

Not

dis

cussed.

Not

dis

cussed.

No.

Audit C

om

mitte

e h

as p

rim

ary

re

sponsib

ility

for

overs

eein

g r

isk

assessm

ent

and m

anagem

ent,

in

clu

din

g the c

om

pany’s

majo

r financia

l exposure

s a

nd t

he s

teps

managem

ent

has taken t

o m

onitor

and c

ontr

ol such e

xposure

s. S

tays

apprised o

f sig

nific

ant

actu

al and

pote

ntial risks f

aced b

y the c

om

pany

in p

art

thro

ugh r

evie

w o

f quart

erly

report

s f

rom

the E

nte

rprise R

isk

Council

(“E

RC

”) a

nd d

eta

iled

pre

senta

tions, at

least

annually

, fr

om

th

e c

hair o

f th

e E

RC

regard

ing t

he

com

pany’s

ris

k a

ssessm

ent

and

managem

ent

pro

cess. A

lso s

tays

apprised o

f F

CP

A a

nd a

nti-b

ribery

risk f

rom

FC

PA

Overs

ight C

om

mitte

e.

Leaders

hip

Develo

pm

ent

and

Com

pensation C

om

mitte

e r

evie

ws

risks that m

ay b

e im

plic

ate

d b

y

executive c

om

pensation p

rogra

ms

and m

onitors

the independence o

f th

e

com

mitte

e’s

com

pensation

consultant.

Nom

inating a

nd C

orp

ora

te

Govern

ance C

om

mitte

e o

vers

ees

Audit C

om

mitte

e r

eport

s t

o

board

at

each q

uart

erly b

oard

m

eeting.

Board

and A

udit C

om

mitte

e

receiv

e p

resenta

tions

thro

ughout

the y

ear

from

m

anagem

ent

regard

ing

specific

pote

ntial risks a

nd

trends a

s n

ecessary

.

At

each b

oard

meeting,

Chairm

an a

nd C

EO

addre

ss

in a

directo

r-only

sessio

n

matt

ers

of

part

icula

r im

port

ance o

r concern

, in

clu

din

g a

ny s

ignific

ant

are

as o

f risk r

equirin

g b

oard

att

ention.

Annually

, th

rough d

edic

ate

d

sessio

ns focusin

g e

ntire

ly o

n

corp

ora

te s

trate

gy,

the full

board

revie

ws in d

eta

il th

e

com

pany’s

short

- and long-

term

str

ate

gie

s,

inclu

din

g

consid

era

tion o

f sig

nific

ant

risks facin

g t

he c

om

pany a

nd

Yes.

The E

RC

, com

posed o

f le

aders

fr

om

functional are

as o

f th

e c

om

pany, m

eets

at

least quart

erly t

o

coord

inate

info

rmation

sharing a

nd m

itig

ation

eff

ort

s for

all

types o

f risks. E

RC

report

s to

Audit C

om

mitte

e.

FC

PA

Overs

ight

Com

mitte

e o

vers

ees

ente

rprise-w

ide

com

plia

nce w

ith the

FC

PA

and t

he a

nti-

bribery

law

s o

f th

e

jurisdic

tions in w

hic

h w

e

conduct busin

ess.

No.

Chair o

f E

RC

is

the V

P o

f In

tern

al A

udit a

nd

Corp

ora

te

Com

plia

nce.

Report

s the E

RC

’s

risk a

naly

ses to

senio

r m

anagem

ent

regula

rly a

nd

att

ends e

ach A

udit

Com

mitte

e

meeting.

Audit C

om

mitte

e r

elie

s

on E

RC

(w

hic

h is

com

posed o

f le

aders

fr

om

the f

unctional

are

as o

f th

e c

om

pany

and m

eets

at

least

quart

erly t

o c

oord

inate

in

form

ation s

haring a

nd

mitig

ation e

ffort

s for

all

types o

f risks)

and the

FC

PA

Overs

ight

Com

mitte

e.

No.

See “

Ris

ks

dele

gate

d t

o

com

mitte

es

Leaders

hip

D

evelo

pm

ent and

Com

pensation

Com

mitte

e.”

App

endi

x 1

cont

inue

d

20 director notes the role of the board in risk oversight www.conferenceboard.org

Co

mp

an

y

(no

n-f

ina

ncia

l in

sti

tuti

on

)

Fo

rmal

Ris

k

Co

mm

itte

e/

Ch

art

er?

(Y

/ N

)

Ris

ks d

ele

gate

d t

o c

om

mit

tees

(in

clu

de n

am

e o

f co

mm

itte

e a

nd

d

es

cri

pti

on

of

risks)

Ris

ks r

evie

wed

at

the b

oard

le

vel

wit

ho

ut

co

mm

itte

e

Is “

en

terp

rise r

isk

man

ag

em

en

t”

dis

cu

ssed

?

If y

es,

ho

w?

Is t

here

a C

hie

f R

isk O

ffic

er?

If

yes, to

wh

om

d

oes h

e o

r sh

e

rep

ort

?

Ap

pro

ach

to

all

ocati

on

o

f ri

sk t

o m

an

ag

em

en

t

Co

mp

en

sati

on

ri

sk i

nclu

ded

in

g

en

era

l ri

sk

dis

cu

ssio

n?

If

yes,

ho

w?

co

ntin

ued

risks r

ela

ted to g

overn

ance p

olic

ies

and p

ractices, in

clu

din

g r

evie

w a

nd

appro

val of

any r

ela

ted p

art

y

transactions a

nd r

ela

tionship

s

involv

ing d

irecto

rs a

nd e

xecutive

off

icers

. In

frastr

uctu

re C

om

mitte

e r

evie

ws

risks r

ela

ted to c

orp

ora

te

infr

astr

uctu

re.

their p

ote

ntial im

pact.

No.

Each o

f th

ree b

oard

com

mitte

es

(Audit,

Directo

rs a

nd C

orp

ora

te

Govern

ance a

nd E

xecutive

Com

pensation a

nd M

anagem

ent

Resourc

es)

exam

ines v

arious

com

ponents

of

ente

rprise r

isk a

s p

art

of

its r

esponsib

ilities.

Board

is r

esponsib

le for

overs

eein

g m

anagem

ent

in

the e

xecution o

f its

responsib

ilities a

nd for

assessin

g t

he c

om

pany’s

appro

ach t

o r

isk

managem

ent.

O

vera

ll re

vie

w o

f risk is

inhere

nt

in the b

oard

’s

consid

era

tion o

f th

e

com

pany’s

long-t

erm

str

ate

gie

s a

nd in the

transactions a

nd o

ther

matt

ers

pre

sente

d to t

he

board

, such a

s c

apital

exp

enditure

s,

acquis

itio

ns,

div

estitu

res a

nd f

inancia

l m

att

ers

.

Yes. S

ee “

Ris

ks

dele

gate

d t

o

com

mitte

es.”

None s

pecifie

d.

Senio

r m

anagem

ent

is

responsib

le for

assessin

g a

nd

managin

g t

he

com

pany’s

various

exp

osure

s t

o r

isk o

n a

day-t

o-d

ay b

asis

, in

clu

din

g the c

reation o

f appro

priate

ris

k

managem

ent

pro

gra

ms

and p

olic

ies.

No.

No.

Audit C

om

mitte

e o

vers

ees issues

rela

ted t

o inte

rnal contr

ol over

financia

l re

port

ing.

Fin

ance C

om

mitte

e o

vers

ees issues

rela

ted t

o the c

om

pany’s

ris

k

tole

rance in c

ash-m

anagem

ent

investm

ents

.

Com

pensation C

om

mitte

e o

vers

ees

risks r

ela

ted to c

om

pensation

pro

gra

ms.

Board

is p

eriodic

ally

briefe

d

by m

anagem

ent

on r

isks that

the c

om

pany f

aces. In

som

e

cases, as w

ith r

isks o

f new

te

chnolo

gy a

nd r

isks r

ela

ted

to p

roduct

accepta

nce,

risk

overs

ight

is a

ddre

ssed a

s

part

of th

e full

board

’s

engagem

ent

with t

he C

EO

and m

anagem

ent.

Board

mem

bers

assess a

nd

overs

ee t

he r

isks a

s a

part

of

their r

evie

w o

f th

e r

ela

ted

busin

ess,

financia

l or

oth

er

activity o

f th

e c

om

pany.

The

Yes. S

ee “

Ris

ks r

evie

wed

at

the b

oard

level w

ithout

com

mitte

e.”

None s

pecifie

d.

Managem

ent

responsib

le for

identify

ing r

isk a

nd r

isk

contr

ols

rela

ted t

o

sig

nific

ant

busin

ess

activitie

s; m

appin

g the

risks to c

om

pany

str

ate

gy;

and

develo

pin

g p

rogra

ms

and r

ecom

mendations

to d

ete

rmin

e t

he

suff

icie

ncy o

f risk

identification, th

e

bala

nce o

f pote

ntial risk

to p

ote

ntial re

ward

, th

e

appro

priate

manner

in

Yes.

The

com

pany

conclu

ded t

hat

its

com

pensation

polic

ies a

nd

pra

ctices d

o n

ot

cre

ate

ris

ks t

hat

are

reasonably

lik

ely

to h

ave a

m

ate

rial advers

e

eff

ect

on t

he

com

pany.

Deta

iled

dis

clo

sure

of

analy

sis

used t

o

reach t

his

App

endi

x 1

cont

inue

d

director notes the role of the board in risk oversight www.conferenceboard.org 21

Co

mp

an

y

(no

n-f

ina

ncia

l in

sti

tuti

on

)

Fo

rmal

Ris

k

Co

mm

itte

e/

Ch

art

er?

(Y

/ N

)

Ris

ks d

ele

gate

d t

o c

om

mit

tees

(in

clu

de n

am

e o

f co

mm

itte

e a

nd

d

es

cri

pti

on

of

risks)

Ris

ks r

evie

wed

at

the b

oard

le

vel

wit

ho

ut

co

mm

itte

e

Is “

en

terp

rise r

isk

man

ag

em

en

t”

dis

cu

ssed

?

If y

es,

ho

w?

Is t

here

a C

hie

f R

isk O

ffic

er?

If

yes, to

wh

om

d

oes h

e o

r sh

e

rep

ort

?

Ap

pro

ach

to

all

ocati

on

o

f ri

sk t

o m

an

ag

em

en

t

Co

mp

en

sati

on

ri

sk i

nclu

ded

in

g

en

era

l ri

sk

dis

cu

ssio

n?

If

yes,

ho

w?

co

ntin

ued

full

board

als

o r

eceiv

es

specific

report

s o

n e

nte

rprise

risk m

anagem

ent,

in w

hic

h

the identification a

nd c

ontr

ol

of

risk a

re t

he p

rim

ary

topic

s

of

the d

iscussio

n.

whic

h t

o c

ontr

ol risk

and t

he s

upport

of

the

pro

gra

ms d

iscussed

belo

w a

nd t

heir r

isk to

com

pany s

trate

gy.

Managem

ent

als

o

pro

vid

es b

riefs

to t

he

board

on t

he s

ignific

ant

volu

nta

ry a

nd

involu

nta

ry r

isks t

hat

the c

om

pany f

aces a

nd

how

the c

om

pany is

seekin

g t

o c

ontr

ol risk if

and w

hen a

ppro

priate

.

conclu

sio

n

follo

wed.

No.

Audit C

om

mitte

e m

eets

in p

rivate

sessio

ns w

ith e

ach o

f th

e C

FO

, V

P

Hum

an R

esourc

es a

nd G

enera

l C

ounsel, C

hie

f C

om

plia

nce O

ffic

er,

V

P C

orp

ora

te I

nte

rnal A

udit, and

repre

senta

tives o

f th

e c

om

pany’s

in

dependent

auditors

at

the

conclu

sio

n o

f every

regula

rly

schedule

d m

eeting,

where

aspects

of

risk m

anagem

ent

are

dis

cussed.

Overs

ight

of

risk

managem

ent is

ultim

ate

ly t

he

responsib

ility

of

the f

ull

board

. B

oard

receiv

es r

egula

r re

port

s o

n a

spects

of

the

com

pany’s

ris

k m

anagem

ent

from

senio

r re

pre

senta

tives o

f th

e c

om

pany’s

independent

auditors

.

Board

meets

annually

with

mem

bers

of m

anagem

ent

with p

rim

ary

responsib

ility

for

managem

ent

of

risk in t

heir

respective a

reas o

f re

sponsib

ility

, in

clu

din

g t

he

Chairm

an/C

EO

; C

FO

; C

ontr

olle

r; T

reasure

r; V

P

Hum

an R

esourc

es a

nd

Genera

l C

ounsel; C

orp

ora

te

Secre

tary

; C

hie

f C

om

plia

nce

Off

icer;

VP

Corp

ora

te A

ffairs,

Govern

ment A

ffairs &

Polic

y,

Worldw

ide O

pera

tions,

Scie

nce &

Technolo

gy,

Corp

ora

te I

nte

rnal A

udit a

nd

the W

orldw

ide C

hairm

an a

nd

Chie

f C

om

plia

nce O

ffic

er

of

each o

f th

e c

om

pany’s

busin

ess s

egm

ents

.

Not

dis

cussed.

None s

pecifie

d.

See “

Ris

ks r

evie

wed a

t th

e b

oard

level w

ithout

com

mitte

e.”

No.

App

endi

x 1

cont

inue

d

22 director notes the role of the board in risk oversight www.conferenceboard.org

Co

mp

an

y

(no

n-f

ina

ncia

l in

sti

tuti

on

)

Fo

rmal

Ris

k

Co

mm

itte

e/

Ch

art

er?

(Y

/ N

)

Ris

ks d

ele

gate

d t

o c

om

mit

tees

(in

clu

de n

am

e o

f co

mm

itte

e a

nd

d

es

cri

pti

on

of

risks)

Ris

ks r

evie

wed

at

the b

oard

le

vel

wit

ho

ut

co

mm

itte

e

Is “

en

terp

rise r

isk

man

ag

em

en

t”

dis

cu

ssed

?

If y

es,

ho

w?

Is t

here

a C

hie

f R

isk O

ffic

er?

If

yes, to

wh

om

d

oes h

e o

r sh

e

rep

ort

?

Ap

pro

ach

to

all

ocati

on

o

f ri

sk t

o m

an

ag

em

en

t

Co

mp

en

sati

on

ri

sk i

nclu

ded

in

g

en

era

l ri

sk

dis

cu

ssio

n?

If

yes,

ho

w?

Yes.

Ris

k P

olic

y C

om

mitte

e o

vers

ees

senio

r m

anagem

ent

risk-r

ela

ted

responsib

ilities inclu

din

g r

evie

win

g

managem

ent

polic

ies a

nd

perf

orm

ance a

gain

st

the firm

’s

polic

ies a

nd b

enchm

ark

s.

A

udit C

om

mitte

e r

evie

ws w

ith

managem

ent th

e s

yste

m o

f in

tern

al

contr

ols

and fin

ancia

l re

port

ing r

elie

d

upon t

o p

rovid

e r

easonable

assura

nce o

f com

plia

nce w

ith t

he

firm

’s o

pera

tional risk m

anagem

ent

pro

cesses.

Com

pensation C

om

mitte

e r

evie

ws

the f

irm

’s c

om

pensation p

ractices a

nd

the r

ela

tionship

am

ong r

isk,

risk

managem

ent

and c

om

pensation in

light

of th

e f

irm

’s o

bje

ctives.

Each c

om

mitte

e o

vers

ees r

eputa

tion

risk issues w

ithin

their s

cope o

f re

sponsib

ility

.

Board

exerc

ises o

vers

ight

of

risk m

anagem

ent

princip

ally

th

rough t

he R

isk P

olic

y

Com

mitte

e a

nd th

e A

udit

Com

mitte

e.

How

ever,

the

board

revie

ws s

ele

cte

d r

isk

topic

s d

irectly a

s

circum

sta

nces w

arr

ant.

Not

dis

cussed.

Yes.

The C

RO

heads R

isk

Managem

ent

and

is a

mem

ber

of

the

firm

’s O

pera

ting

Com

mitte

e.

Report

s to t

he

CE

O a

nd the

board

, prim

arily

th

rough t

he R

isk

Polic

y C

om

mitte

e.

Each lin

e o

f busin

ess is

responsib

le for

managin

g its

ow

n r

isks,

with its

ow

n r

isk

com

mitte

e a

nd a

chie

f risk o

ffic

er.

R

isk M

anagem

ent

is

responsib

le for

pro

vid

ing a

n

independent

firm

wid

e

function o

f risk

managem

ent

and

contr

ols

and is h

eaded

by t

he firm

’s C

RO

. T

he C

hie

f In

vestm

ent

Off

ice a

nd C

orp

ora

te

Tre

asury

are

re

sponsib

le for

managin

g t

he firm

’s

liquid

ity, in

tere

st

rate

and f

ore

ign e

xchange

risk.

Legal and C

om

plia

nce

has o

vers

ight

for

legal

and f

iducia

ry r

isk.

Yes. S

ee “

Ris

ks

dele

gate

d t

o

com

mitte

e –

C

om

pensation

Com

mitte

e.”

No.

Audit C

om

mitte

e r

evie

ws a

nd

dis

cusses r

isk a

ssessm

ent

and r

isk

managem

ent

guid

elin

es,

polic

ies a

nd

pro

cesses b

y u

tiliz

ing t

he c

om

pany’s

E

RM

appro

ach. A

fter

managem

ent

revie

ws k

ey r

isks w

ith A

udit

Com

mitte

e,

the c

om

mitte

e a

llocate

s

responsib

ility

to b

oard

or

oth

er

com

mitte

es d

ependin

g o

n w

hic

h is in

the b

est

positio

n t

o r

evie

w a

nd

assess b

oth

the r

isk e

xposure

s a

nd

the s

teps m

anagem

ent

has taken t

o

monitor

and c

ontr

ol th

ose e

xposure

s.

Fin

ance C

om

mitte

e r

evie

ws a

nd

report

s t

o t

he b

oard

on f

inancia

l risk

managem

ent

activitie

s, such a

s

fore

ign e

xchange,

com

moditie

s,

Board

responsib

le for

overs

eein

g t

he o

vera

ll risk

assessm

ent

and

managem

ent

pro

cesses.

Board

revie

ws f

ood s

afe

ty

polic

ies, pro

cedure

s a

nd

pro

gra

ms, in

clu

din

g t

hose

rela

ted t

o s

upply

chain

.

Board

als

o r

evie

ws s

trate

gie

s

rela

ted t

o c

om

petition,

inclu

din

g fro

m p

rivate

label

and c

usto

mer

concentr

ation.

Yes. S

ee “

Ris

ks

dele

gate

d t

o c

om

mitte

es

– A

udit C

om

mitte

e.”

E

RM

appro

ach d

esig

ned

in p

art

to e

nsure

that th

e

board

and r

ele

vant

com

mitte

es r

eceiv

e

advic

e a

bout

and

unders

tand t

he

com

pany’s

ris

k

managem

ent

pro

cess,

the p

art

icip

ants

in t

he

pro

cess a

nd the

info

rmation g

ath

ere

d

thro

ugh t

he a

ppro

ach.

None s

pecifie

d.

Annually

, m

anagem

ent

identifies k

ey r

isks

inclu

din

g s

trate

gic

, financia

l, o

pera

tional,

legal and r

egula

tory

risks. M

anagem

ent

revie

ws t

hese r

isks w

ith

the A

udit C

om

mitte

e.

Yes. S

ee “

Ris

ks

dele

gate

d t

o

com

mitte

es –

H

um

an

Resourc

es a

nd

Com

pensation

Com

mitte

e.”

al

ci

na

nif-n

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mo

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he

tur

so

en

tt

n p

ar

ih

de

oac

appr

MR

E

ee

ttim

mo

Ct

udi

A–

mom

co

ed

tegat

del

sk

siR“

ee

S.s

eY

itites

egi

tart

ss

w

n.

hai

ce

sho

tng

iand

es

ry

et

fa

sod

s.

es

se

co

ksir

lal

er

vor

e f

an he

tev

rsireg

lnifnc

ide

in

Aed.

ifipec

one s

N

ethe

thatgned

is”

e.

es

ettim

.k

si r

yar

iduc

ind f

egal

ght

ettim

om

Cs

pen

om

Ce

cour

es

Ran

um

Hee

ttim

mo

ced

egat

del

ee

S.s

eY

ee.

ttim

mo

Ct

udi

eA

htiw

sk

sire

hes

ts

wei

vent

manage

M.

sk

sy

or

at

egul

and

rgal

,onal

iat

oper

,al

inanc

,c

egi

tart

ng s

udi

lc

sk

sirey

ks

eifient

ent

manage

m,

ylnnual

”e.on

iat a

nd

s

–eso

dt

sk

siR“

mm

oc

hange,

cgn e

xei

or

f,

es

itivit

ac

nt

eem

ga

na

md o

n

boar

he

tot

stepor

rev

ree

ttim

mo

eC

nanc

iF

sho

tol

ront

c a

nd

orr

toni

mt

en

manage

meps

the

st

oc

err

mot

us

and

c p

rm

orfng

udi

lnc

ipe

mo

oc

ted

at

el

rre

,es

itodi

mas

huc

sk

siral

inanc

ifand

sew

i

.es

ur

pos

e e

xs

oten

ak

ts

ha

oa

appr

he

tough

hr

ther

gat

on

iat

mor

nf

ihe

and

ts

es

oc

prro

nis

pant

icit

par

he

tc

opr

ten

manage

m

.on

iat

rent

cn

abel

le

at

vion,

itit

.h

aced

r

he

t,

ses

App

endi

x 1

cont

inue

d

director notes the role of the board in risk oversight www.conferenceboard.org 23

Co

mp

an

y

(no

n-f

ina

ncia

l in

sti

tuti

on

)

Fo

rmal

Ris

k

Co

mm

itte

e/

Ch

art

er?

(Y

/ N

)

Ris

ks d

ele

gate

d t

o c

om

mit

tees

(in

clu

de n

am

e o

f co

mm

itte

e a

nd

d

es

cri

pti

on

of

risks)

Ris

ks r

evie

wed

at

the b

oard

le

vel

wit

ho

ut

co

mm

itte

e

Is “

en

terp

rise r

isk

man

ag

em

en

t”

dis

cu

ssed

?

If y

es,

ho

w?

Is t

here

a C

hie

f R

isk O

ffic

er?

If

yes, to

wh

om

d

oes h

e o

r sh

e

rep

ort

?

Ap

pro

ach

to

all

ocati

on

o

f ri

sk t

o m

an

ag

em

en

t

Co

mp

en

sati

on

ri

sk i

nclu

ded

in

g

en

era

l ri

sk

dis

cu

ssio

n?

If

yes,

ho

w?

co

ntin

ued

inte

rest ra

te e

xposure

, in

sura

nce

pro

gra

ms a

nd term

s o

f custo

mer

financin

g.

Hum

an R

esourc

es a

nd

Com

pensation C

om

mitte

e r

evie

ws

com

pensation p

olic

ies a

nd p

ractices

for

em

plo

yees,

inclu

din

g n

on-

executive a

nd e

xecutive o

ffic

ers

, as

they r

ela

te to r

isk m

anagem

ent

pra

ctices a

nd r

isk-t

akin

g incentives.

No.

Audit C

om

mitte

e c

onsid

ers

audit,

accounting a

nd c

om

plia

nce r

isk a

nd

receiv

es r

eport

s fro

m the h

ead o

f in

tern

al audit, th

e h

ead o

f corp

ora

te

tax,

the G

enera

l C

ounsel, the C

hie

f C

om

plia

nce O

ffic

er

and t

he C

hie

f In

form

ation O

ffic

er.

Responsib

le for

revie

w o

f th

e c

om

pany’s

majo

r risk

exp

osure

s (

wheth

er

financia

l,

opera

tional or

oth

erw

ise)

and t

he

ste

ps m

anagem

ent

has taken t

o

monitor

and c

ontr

ol such e

xposure

s,

and f

or

evalu

ating m

anagem

ent’s

pro

cess to a

ssess a

nd m

anage t

he

com

pany’s

ente

rprise r

isk issues.

Com

pensation C

om

mitte

e c

onsid

ers

le

vel of

risk im

plie

d b

y c

om

pensation

pro

gra

ms, in

clu

din

g incentive

com

pensation p

rogra

ms in w

hic

h

CE

O a

nd o

ther

em

plo

yees

part

icip

ate

.

Govern

ance C

om

mitte

e m

onitors

pote

ntial risks t

o t

he e

ffectiveness o

f th

e b

oard

, nota

bly

directo

r successio

n a

nd b

oard

com

positio

n

and t

he p

rincip

al polic

ies that

guid

e

the c

om

pany’s

govern

ance.

C

orp

ora

te R

esponsib

ility

Com

mitte

e

revie

ws r

isks t

o t

he b

usin

ess t

hat

may b

e e

nta

iled b

y t

rends in

corp

ora

te s

ocia

l re

sponsib

ility

.

Fin

ance C

om

mitte

e r

evie

ws v

arious

Board

as a

whole

has

responsib

ility

for

risk

overs

ight,

but com

mitte

es

als

o o

vers

ee the c

om

pany’s

risk p

rofile

and e

xposure

s

rela

ting t

o m

att

ers

within

their

scope o

f auth

ority

and r

eport

to

the b

oard

about th

eir

delib

era

tions.

Board

actively

engaged in

overs

eein

g t

he c

om

pany’s

str

ate

gic

direction a

nd

obje

ctives, ta

kin

g into

account

the c

om

pany’s

ris

k

pro

file

and e

xposure

s.

Board

conducts

an a

nnual in

-depth

revie

w o

f th

e b

usin

ess,

whic

h inclu

des c

onsid

era

tion

of str

ate

gic

, opera

tional,

com

petitive, financia

l,

com

plia

nce a

nd o

ther

risk

exp

osure

s.

Board

als

o r

egula

rly r

evie

ws

leaders

hip

develo

pm

ent

initia

tives a

nd s

hort

- and

long-t

erm

successio

n p

lans

for

the C

EO

and o

ther

senio

r m

anagem

ent

positio

ns,

inclu

din

g in t

he e

vent

of

unanticip

ate

d v

acancie

s in

those o

ffic

es.

Yes. S

ee “

Ris

ks

dele

gate

d t

o c

om

mitte

es

– A

udit C

om

mitte

e.”

None s

pecifie

d.

Not

specifie

d.

Yes. S

ee “

Ris

ks

dele

gate

d t

o

com

mitte

es

Com

mitte

e.”

App

endi

x 1

cont

inue

d

24 director notes the role of the board in risk oversight www.conferenceboard.org

Co

mp

an

y

(no

n-f

ina

ncia

l in

sti

tuti

on

)

Fo

rmal

Ris

k

Co

mm

itte

e/

Ch

art

er?

(Y

/ N

)

Ris

ks d

ele

gate

d t

o c

om

mit

tees

(in

clu

de n

am

e o

f co

mm

itte

e a

nd

d

es

cri

pti

on

of

risks)

Ris

ks r

evie

wed

at

the b

oard

le

vel

wit

ho

ut

co

mm

itte

e

Is “

en

terp

rise r

isk

man

ag

em

en

t”

dis

cu

ssed

?

If y

es,

ho

w?

Is t

here

a C

hie

f R

isk O

ffic

er?

If

yes, to

wh

om

d

oes h

e o

r sh

e

rep

ort

?

Ap

pro

ach

to

all

ocati

on

o

f ri

sk t

o m

an

ag

em

en

t

Co

mp

en

sati

on

ri

sk i

nclu

ded

in

g

en

era

l ri

sk

dis

cu

ssio

n?

If

yes,

ho

w?

co

ntin

ued

financia

l polic

ies im

ple

mente

d t

o

manage f

inancia

l risk e

xposure

s,

such a

s t

hose p

ert

ain

ing t

o t

he

com

pany’s

use o

f derivative

instr

um

ents

.

No.

Each c

om

mitte

e o

f th

e b

oard

overs

ees s

pecific

are

as o

f risk

rele

vant

to the c

om

mitte

e t

hro

ugh

direct in

tera

ctions w

ith t

he C

EO

, m

em

bers

of th

e E

xecutive C

om

mitte

e

and t

he h

eads o

f busin

ess u

nits a

nd

corp

ora

te f

unctions.

Audit C

om

mitte

e o

vers

ees r

isk

rela

ting t

o F

inance, IT

, B

usin

ess

Inte

grity

and S

arb

anes-O

xle

y

report

ing t

hro

ugh its

inte

ractions w

ith

the C

FO

, C

ontr

olle

r, a

nd H

ead o

f In

tern

al A

udit. A

udit C

om

mitte

e a

lso

overs

ees a

nd r

evie

ws t

he E

RM

pro

cess to e

nsure

it is

robust

and

functionin

g e

ffectively

.

Thro

ugh t

he E

RM

pro

cess,

the f

ull

board

has o

vers

ight

of

the m

ost sig

nific

ant risks

facin

g t

he c

om

pany.

Board

com

mitte

es m

ay

ele

vate

cert

ain

ris

ks to the

board

for

consid

era

tion.

Mate

rial risks m

ay a

lso b

e

ele

vate

d t

hro

ugh t

he C

EO

, E

xecutive C

om

mitte

e a

nd

Chie

f S

trate

gy O

ffic

er

to the

full

board

.

Yes.

The E

RM

pro

cess

was e

sta

blis

hed t

o

ensure

a c

om

ple

te

com

pany-w

ide a

ppro

ach

to r

isk o

ver

five d

istinct

but

overlappin

g c

ore

are

as:

(1)

str

ate

gy

(macro

ris

ks w

hic

h m

ay

impact th

e c

om

pany’s

abili

ty t

o a

chie

ve long-

term

busin

ess

obje

ctives);

(2)

opera

tions (

risks in

opera

tions w

hic

h m

ay

impact th

e c

om

pany’s

abili

ty t

o a

chie

ve

busin

ess o

bje

ctives);

(3)

com

plia

nce (

risks r

ela

ted

to c

om

plia

nce w

ith law

s,

regula

tions a

nd c

om

pany

polic

ies);

(4)

report

ing

(ris

ks to m

ain

tain

ing

accura

te f

inancia

l sta

tem

ents

and t

imely

, com

ple

te f

inancia

l dis

clo

sure

s)

and (

5)

reputa

tion a

nd

responsib

ility

(risks w

hic

h

may im

pact th

e

com

pany’s

reputa

tion o

r th

e w

ell-

bein

g o

f th

e

com

pany o

r its

em

plo

yees).

G

oal of

the E

RM

pro

cess

is to p

rovid

e a

n o

ngoin

g

pro

cess, eff

ecte

d a

t all

levels

of th

e c

om

pany

acro

ss e

ach b

usin

ess

unit a

nd c

orp

ora

te

None s

pecifie

d.

The C

EO

, m

em

bers

of

the E

xecutive

Com

mitte

e a

nd the

heads o

f busin

ess u

nits

and c

orp

ora

te functions

inte

ract w

ith t

he b

oard

com

mitte

es t

hat

overs

ee s

pecific

are

as

of

risk.

No.

App

endi

x 1

cont

inue

d

director notes the role of the board in risk oversight www.conferenceboard.org 25

Co

mp

an

y

(no

n-f

ina

ncia

l in

sti

tuti

on

)

Fo

rmal

Ris

k

Co

mm

itte

e/

Ch

art

er?

(Y

/ N

)

Ris

ks d

ele

gate

d t

o c

om

mit

tees

(in

clu

de n

am

e o

f co

mm

itte

e a

nd

d

es

cri

pti

on

of

risks)

Ris

ks r

evie

wed

at

the b

oard

le

vel

wit

ho

ut

co

mm

itte

e

Is “

en

terp

rise r

isk

man

ag

em

en

t”

dis

cu

ssed

?

If y

es,

ho

w?

Is t

here

a C

hie

f R

isk O

ffic

er?

If

yes, to

wh

om

d

oes h

e o

r sh

e

rep

ort

?

Ap

pro

ach

to

all

ocati

on

o

f ri

sk t

o m

an

ag

em

en

t

Co

mp

en

sati

on

ri

sk i

nclu

ded

in

g

en

era

l ri

sk

dis

cu

ssio

n?

If

yes,

ho

w?

co

ntin

ued

function t

o identify

and

assess r

isk, m

onitor

risk,

and a

gre

e o

n m

itig

ating

action.

P

roxy

filin

g pr

eced

es e

ffect

ive

date

of n

ew S

EC

di

sclo

sure

rule

s.

No.

Audit C

om

mitte

e r

esponsib

le for

inquirin

g a

bout sig

nific

ant

risks,

revie

win

g o

ur

polic

ies for

risk

assessm

ent

and r

isk m

anagem

ent

and a

ssessin

g the s

teps

managem

ent

has taken t

o c

ontr

ol

these r

isks.

Fin

ance C

om

mitte

e r

esponsib

le f

or

polic

ies for

managin

g fin

ancia

l risk.

Not

dis

cussed.

Not

dis

cussed.

Not

dis

cussed.

Not

dis

cussed.

No.

Yes.

Ris

k C

om

mitte

e (

com

prisin

g s

ole

ly

nonm

anagem

ent

directo

rs)

assis

ts

the b

oard

in o

vers

ight

of

(1)

the

com

pany’s

ris

k g

overn

ance s

tructu

re,

(2)

the c

om

pany’s

ris

k m

anagem

ent

and r

isk a

ssessm

ent

guid

elin

es a

nd

polic

ies r

egard

ing m

ark

et, c

redit a

nd

liquid

ity a

nd fundin

g r

isk,

(3)

the

com

pany’s

ris

k t

ole

rance,

inclu

din

g

risk t

ole

rance levels

and c

apital

targ

ets

and lim

its a

nd (

4)

the

perf

orm

ance o

f th

e C

RO

. A

udit C

om

mitte

e r

eta

ins r

esponsib

ility

fo

r overs

ight

of cert

ain

aspects

of

risk

managem

ent,

inclu

din

g r

evie

w o

f th

e

majo

r opera

tional, f

ranchis

e,

reputa

tional, legal and c

om

plia

nce

risk e

xposure

s o

f th

e c

om

pany a

nd

the s

teps m

anagem

ent

has taken t

o

monitor

and c

ontr

ol such e

xposure

, as w

ell

as g

uid

elin

es a

nd p

olic

ies that

govern

the p

rocess for

risk

assessm

ent

and r

isk m

anagem

ent.

C

om

pensation,

Managem

ent

Develo

pm

ent

and S

uccessio

n

Com

mitte

e (

“CM

DS

”) w

ork

s w

ith the

CR

O t

o e

valu

ate

wheth

er

Board

has o

vers

ight fo

r th

e

com

pany’s

ER

M fra

mew

ork

and is r

esponsib

le for

help

ing

to e

nsure

that th

e c

om

pany’s

risks a

re m

anaged in a

sound

manner.

The R

isk C

om

mitte

e, A

udit

Com

mitte

e a

nd the C

RO

re

port

to the b

oard

on a

re

gula

r basis

.

Not

dis

cussed.

Yes. S

ee “

Ris

ks

dele

gate

d t

o

com

mitte

es –

Ris

k

Com

mitte

e.”

The f

irm

Ris

k

Com

mitte

e,

a

managem

ent

com

mitte

e a

ppoin

ted

and c

haired b

y the

CE

O t

hat consis

ts o

f th

e m

ost senio

r off

icers

of

the c

om

pany,

inclu

din

g the C

RO

, C

hie

f Legal O

ffic

er

and

CF

O,o

vers

ee the

com

pany’s

glo

bal risk

managem

ent str

uctu

re.

Responsib

ilities inclu

de

overs

ight

of

the

com

pany’s

ris

k

managem

ent

princip

les,

pro

cedure

s

and lim

its a

nd the

monitoring o

f capital

levels

and m

ate

rial

mark

et, c

redit,

liquid

ity

and f

undin

g, le

gal,

opera

tional, fra

nchis

e

and r

egula

tory

ris

k

matt

ers

and o

ther

risks,

as a

ppro

priate

, and t

he

ste

ps m

anagem

ent

has

taken to m

onitor

and

Yes. S

ee “

Ris

ks

dele

gate

d t

o

com

mitte

es –

C

MD

S

Com

mitte

e.”

App

endi

x 1

cont

inue

d

26 director notes the role of the board in risk oversight www.conferenceboard.org

Co

mp

an

y

(no

n-f

ina

ncia

l in

sti

tuti

on

)

Fo

rmal

Ris

k

Co

mm

itte

e/

Ch

art

er?

(Y

/ N

)

Ris

ks d

ele

gate

d t

o c

om

mit

tees

(in

clu

de n

am

e o

f co

mm

itte

e a

nd

d

es

cri

pti

on

of

risks)

Ris

ks r

evie

wed

at

the b

oard

le

vel

wit

ho

ut

co

mm

itte

e

Is “

en

terp

rise r

isk

man

ag

em

en

t”

dis

cu

ssed

?

If y

es,

ho

w?

Is t

here

a C

hie

f R

isk O

ffic

er?

If

yes, to

wh

om

d

oes h

e o

r sh

e

rep

ort

?

Ap

pro

ach

to

all

ocati

on

o

f ri

sk t

o m

an

ag

em

en

t

Co

mp

en

sati

on

ri

sk i

nclu

ded

in

g

en

era

l ri

sk

dis

cu

ssio

n?

If

yes,

ho

w?

co

ntin

ued

com

pensation a

rrangem

ents

encoura

ge u

nnecessary

or

excessiv

e

risk-t

akin

g a

nd w

heth

er

risks a

risin

g

from

the c

om

pany’s

com

pensation

arr

angem

ents

are

reasonably

lik

ely

to

have a

mate

rial advers

e e

ffect

on t

he

com

pany.

manage s

uch r

isks.

No.

Audit C

om

mitte

e p

rim

arily

re

sponsib

le for

overs

eein

g E

RM

pro

gra

m. M

eeting a

gendas inclu

de

dis

cussio

ns o

f in

div

idual risk a

reas

thro

ughout

year

plu

s E

RM

pro

cess

annually

. A

lso h

as p

rim

ary

re

sponsib

ility

for

com

plia

nce

pro

gra

m.

Com

pensation C

om

mitte

e c

onsid

ers

th

e r

isks a

ssocia

ted w

ith t

he

com

pany’s

com

pensation p

olic

ies

and p

ractices,

with r

espect to

both

executive c

om

pensation a

nd

com

pensation g

enera

lly.

Each o

f th

e C

orp

ora

te G

overn

ance

and S

cie

nce &

Technolo

gy

Com

mitte

es o

vers

ees r

isks

associa

ted w

ith its

respective a

rea o

f re

sponsib

ility

.

Board

execute

s r

isk o

vers

ight

responsib

ility

directly a

nd

thro

ugh its

com

mitte

es.

Board

consid

ers

specific

ris

k

topic

s,

inclu

din

g r

isks

associa

ted w

ith t

he

com

pany’s

str

ate

gic

pla

n,

capital str

uctu

re a

nd

develo

pm

ent

activitie

s.

Board

kept

abre

ast

of

com

mitte

es’ risk o

vers

ight

via

re

port

s o

f th

e c

om

mitte

e

chairm

an to the f

ull

board

. B

oard

receiv

es d

eta

iled

regula

r re

port

s in c

onnection

with e

very

regula

r board

m

eeting,

from

heads o

f princip

al busin

ess a

nd

corp

ora

te f

unctions that

inclu

de d

iscussio

ns o

f risks

and e

xposure

s in t

heir

respective a

reas o

f re

sponsib

ility

. R

eport

s

dis

cussed,

as n

ecessary

, at

board

meetings.

Board

routinely

info

rmed o

f develo

pm

ents

that

could

aff

ect

risk p

rofile

.

Yes. A

udit C

om

mitte

e

has r

esponsib

ility

for

overs

eein

g t

he

com

pany’s

ER

M

pro

gra

m. A

udit

Com

mitte

e d

iscusses t

he

ER

M p

rocess a

nnually

.

No.

The

com

pany’s

Chie

f In

tern

al A

uditor

facili

tate

s

com

pany’s

ER

M

pro

gra

m a

s p

art

of

str

ate

gic

pla

nnin

g

pro

cess u

nder

executive

sponsors

hip

of

SV

P a

nd C

FO

and

SV

P a

nd G

C.

Report

s

independently t

o

Audit C

om

mitte

e.

Not

specifie

d.

Yes. S

ee “

Ris

ks

dele

gate

d t

o

com

mitte

es –

C

om

pensation

Com

mitte

e.”

App

endi

x 1

cont

inue

d

director notes the role of the board in risk oversight www.conferenceboard.org 27

Co

mp

an

y

(no

n-f

ina

ncia

l in

sti

tuti

on

)

Fo

rmal

Ris

k

Co

mm

itte

e/

Ch

art

er?

(Y

/ N

)

Ris

ks d

ele

gate

d t

o c

om

mit

tees

(in

clu

de n

am

e o

f co

mm

itte

e a

nd

d

es

cri

pti

on

of

risks)

Ris

ks r

evie

wed

at

the b

oard

le

vel

wit

ho

ut

co

mm

itte

e

Is “

en

terp

rise r

isk

man

ag

em

en

t”

dis

cu

ssed

?

If y

es,

ho

w?

Is t

here

a C

hie

f R

isk O

ffic

er?

If

yes, to

wh

om

d

oes h

e o

r sh

e

rep

ort

?

Ap

pro

ach

to

all

ocati

on

o

f ri

sk t

o m

an

ag

em

en

t

Co

mp

en

sati

on

ri

sk i

nclu

ded

in

g

en

era

l ri

sk

dis

cu

ssio

n?

If

yes,

ho

w?

P

roxy

filin

g pr

eced

es e

ffect

ive

date

of n

ew S

EC

di

sclo

sure

rule

s.

No.

Audit C

om

mitte

e r

esponsib

le for

the

com

pany’s

overa

ll risk m

anagem

ent

pro

cess.

Audit C

om

mitte

e c

hart

er

sta

tes that

the A

udit C

om

mitte

e’s

revie

w o

f risk

managem

ent in

clu

des d

iscussio

n o

f th

e f

ollo

win

g:

guid

elin

es a

nd p

olic

ies

to g

overn

ris

k a

ssessm

ent

and r

isk

managem

ent;

the c

om

pany’s

majo

r risk e

xposure

s a

nd t

he s

teps

com

pany m

anagem

ent

has taken to

monitor

and c

ontr

ol such e

xposure

s;

the s

tatu

s o

f th

e s

ecurity

for

the

com

pany’s

ele

ctr

onic

data

-pro

cessin

g

info

rmation s

yste

ms,

and the g

enera

l security

of th

e c

om

pany’s

people

, assets

and info

rmation s

yste

ms; th

e

sta

tus o

f th

e c

om

pany’s

fin

ancia

l in

str

um

ents

and the c

om

pany’s

pensio

n a

nd insura

nce p

rogra

ms.

Not

dis

cussed.

Not

dis

cussed.

Not

dis

cussed.

Not

dis

cussed.

Not

dis

cussed.

Yes.

Ris

k C

om

mitte

e o

vers

ees t

he

com

pany’s

ER

M a

ctivitie

s g

enera

lly.

Receiv

es r

eport

s fro

m the c

om

pany’s

m

anagem

ent

risk c

om

mitte

e a

nd the

CR

O r

egard

ing t

he inte

rrela

tionship

s

of

risks, w

hic

h e

nable

s a

hig

h d

egre

e

of coord

ination b

etw

een m

anagem

ent

and t

he b

oard

. R

esponsib

le f

or

overs

ight

of

risks r

ela

ted t

o b

usin

ess

opera

tions inclu

din

g insura

nce

underw

riting a

nd c

laim

s,

rein

sura

nce,

cata

str

ophe r

isk, cre

dit r

isk in

insura

nce o

pera

tions,

info

rmation

technolo

gy a

nd b

usin

ess c

ontinuity

pla

ns.

Audit C

om

mitte

e o

vers

ees r

isks

rela

ted t

o inte

grity

of financia

l sta

tem

ents

, in

clu

din

g p

repara

tion a

nd

pre

senta

tion a

nd o

vers

ight

of

the

pro

cess for

esta

blis

hin

g insura

nce

reserv

es.

In

vestm

ent

and C

apital M

ark

ets

C

om

mitte

e a

ssis

ts b

oard

in

Board

revie

ws a

t le

ast

annually

, sig

nific

ant

risks that

managem

ent,

thro

ugh E

RM

, has identified a

nd t

hen

evalu

ate

s the a

llocation

am

ong v

arious c

om

mitte

es

for

each identified r

isk.

Each c

om

mitte

e p

eriodic

ally

re

port

s t

o b

oard

on its

ris

k

overs

ight

activitie

s.

Yes.

The b

oard

’s R

isk

com

mitte

e is p

rim

arily

re

sponsib

le for

the

ente

rprise r

isk

managem

ent

pro

gra

m,

but

all

board

com

mitte

es

and a

separa

te r

isk

managem

ent com

mitte

e

are

all

involv

ed in E

RM

.

ER

M is a

com

pany-w

ide

initia

tive t

hat in

volv

es the

board

and m

anagem

ent

identify

ing, assessin

g

and m

anagin

g r

isk t

hat

could

aff

ect th

e

com

pany’s

abili

ty t

o f

ulfill

busin

ess o

bje

ctives o

r execute

corp

ora

te

str

ate

gy.

Yes.

The C

RO

re

port

s t

o R

isk

Com

mitte

e.

A s

epara

te

managem

ent

risk

com

mitte

e r

eport

s t

o

the b

oard

’s R

isk

Com

mitte

e.

See “

Is e

nte

rprise r

isk

managem

ent

dis

cussed?”

App

endi

x 1

cont

inue

d

28 director notes the role of the board in risk oversight www.conferenceboard.org

Co

mp

an

y

(no

n-f

ina

ncia

l in

sti

tuti

on

)

Fo

rmal

Ris

k

Co

mm

itte

e/

Ch

art

er?

(Y

/ N

)

Ris

ks d

ele

gate

d t

o c

om

mit

tees

(in

clu

de n

am

e o

f co

mm

itte

e a

nd

d

es

cri

pti

on

of

risks)

Ris

ks r

evie

wed

at

the b

oard

le

vel

wit

ho

ut

co

mm

itte

e

Is “

en

terp

rise r

isk

man

ag

em

en

t”

dis

cu

ssed

?

If y

es,

ho

w?

Is t

here

a C

hie

f R

isk O

ffic

er?

If

yes, to

wh

om

d

oes h

e o

r sh

e

rep

ort

?

Ap

pro

ach

to

all

ocati

on

o

f ri

sk t

o m

an

ag

em

en

t

Co

mp

en

sati

on

ri

sk i

nclu

ded

in

g

en

era

l ri

sk

dis

cu

ssio

n?

If

yes,

ho

w?

cont

inue

d

exe

rcis

ing o

vers

ight

of com

pany’s

m

anagem

ent

of

investm

ent

port

folio

(inclu

din

g c

redit r

isk m

onitoring)

capital str

uctu

re, financin

g

arr

angem

ents

and liq

uid

ity.

C

om

pensation C

om

mitte

e o

vers

ees

risks r

ela

ted to c

om

pensation

pro

gra

ms inclu

din

g form

ula

tion,

adm

inis

tration a

nd r

egula

tory

com

plia

nce.

Nom

inating &

Corp

ora

te G

overn

ance

Com

mitte

e o

vers

ees r

isks r

ela

ted to

corp

ora

te g

overn

ance m

att

ers

, successio

n p

lannin

g,

directo

r in

dependence a

nd r

ela

ted-p

ers

on

transactions.

Each c

om

mitte

e is r

esponsib

le for

monitoring r

eputa

tional risk t

o t

he

exte

nt

arisin

g o

ut

of

allo

cate

d s

ubje

ct

matt

er.

No.

Audit C

om

mitte

e a

ssis

ts b

oard

in

overs

ight

of

com

pany’s

polic

ies a

nd

pra

ctices t

o a

ssess a

nd m

anage

exp

osure

to r

isk. A

udit C

om

mitte

e

revie

ws c

om

pany’s

majo

r financia

l risk e

xposure

s a

nd a

num

ber

of

opera

tional, c

om

plia

nce,

reputa

tional

and s

trate

gic

ris

ks, in

clu

din

g s

teps t

o

monitor

and m

anage t

hose r

isks.

Als

o

dis

cusses c

om

pany’s

overa

ll risk

polic

ies a

nd p

ractices f

or

ER

M,

inclu

din

g the d

ele

gation o

f overs

ight

for

additio

nal are

as o

f risk to o

ther

board

com

mitte

es.

All

oth

er

com

mitte

es a

re r

esponsib

le

for

overs

ight

of

risk m

anagem

ent

pra

ctices f

or

cate

gories o

f risks

rele

vant

to their f

unctions.

Fin

ance c

om

mitte

e o

vers

ees

financia

l, c

apital and insura

nce r

isks.

Board

as a

gro

up r

evie

ws r

isk

managem

ent

pra

ctices a

nd a

num

ber

of sig

nific

ant

risks in

the c

ours

e o

f its r

evie

w o

f corp

ora

te s

trate

gy,

busin

ess

pla

ns, re

port

s o

f board

com

mitte

e m

eetings a

nd

oth

er

pre

senta

tions.

Yes.

The c

om

pany h

as

adopte

d e

nte

rprise r

isk

managem

ent

polic

ies

based o

n the I

nte

gra

ted

Fra

mew

ork

of

the

Com

mitte

e o

f S

ponsoring

Org

aniz

ations (

“CO

SO

”).

Under

the c

om

pany’s

polic

ies, th

e p

resid

ents

of

each m

ajo

r busin

ess u

nit

are

responsib

le f

or

identify

ing r

isks t

hat

could

aff

ect

achie

vem

ent

of

busin

ess g

oals

and

str

ate

gie

s, fo

r assessin

g

the lik

elih

ood a

nd

pote

ntial im

pact of

sig

nific

ant

risks, fo

r prioritizin

g r

isks a

nd

actions to b

e taken in

response a

nd for

No.

Per

the

com

pany’s

ER

M

polic

y, th

e

rele

vant

pre

sid

ents

of

majo

r busin

ess

units r

eport

to

rele

vant

com

mitte

es a

nd

board

. S

ee “

Is ‘ente

rprise

risk m

anagem

ent’

dis

cussed?”

See “

Is ‘ente

rprise r

isk

managem

ent’

dis

cussed?”

See “

Ris

ks

dele

gate

d t

o

com

mitte

es –

C

om

pensation

Com

mitte

e.”

App

endi

x 1

cont

inue

d

director notes the role of the board in risk oversight www.conferenceboard.org 29

Co

mp

an

y

(no

n-f

ina

ncia

l in

sti

tuti

on

)

Fo

rmal

Ris

k

Co

mm

itte

e/

Ch

art

er?

(Y

/ N

)

Ris

ks d

ele

gate

d t

o c

om

mit

tees

(in

clu

de n

am

e o

f co

mm

itte

e a

nd

d

es

cri

pti

on

of

risks)

Ris

ks r

evie

wed

at

the b

oard

le

vel

wit

ho

ut

co

mm

itte

e

Is “

en

terp

rise r

isk

man

ag

em

en

t”

dis

cu

ssed

?

If y

es,

ho

w?

Is t

here

a C

hie

f R

isk O

ffic

er?

If

yes, to

wh

om

d

oes h

e o

r sh

e

rep

ort

?

Ap

pro

ach

to

all

ocati

on

o

f ri

sk t

o m

an

ag

em

en

t

Co

mp

en

sati

on

ri

sk i

nclu

ded

in

g

en

era

l ri

sk

dis

cu

ssio

n?

If

yes,

ho

w?

co

ntin

ued

Public

issues r

evie

w c

om

mitte

e

overs

ees r

isk m

anagem

ent

polic

ies

and p

ractices w

ith r

egard

to s

ocia

l re

sponsib

ility

, re

puta

tion, safe

ty a

nd

the e

nvironm

ent.

Com

pensation C

om

mitte

e o

vers

ees

com

pensation p

olic

ies a

nd p

ractices

as they r

ela

te to r

isk m

anagem

ent.

regula

rly r

eport

ing t

o t

he

CE

O o

n a

ctions t

o

monitor

and m

anage

sig

nific

ant

risks in o

rder

to r

em

ain

within

the

com

pany’s

range o

f risk

tole

rance.

T

he C

EO

, C

FO

and G

C

periodic

ally

report

on t

he

com

pany’s

ris

k

managem

ent

polic

ies

and p

ractices t

o r

ele

vant

board

com

mitte

es a

nd t

o

the f

ull

board

.

No.

Each c

om

mitte

e o

vers

ees

managem

ent

of

risks t

hat

fall

within

its a

rea o

f re

sponsib

ility

.

Audit C

om

mitte

e r

evie

ws r

isk

managem

ent

and c

ontr

ols

, in

clu

din

g

identify

ing a

nd m

onitoring h

igh-

priority

ris

ks a

nd d

evelo

pin

g e

ffective

mitig

ation s

trate

gie

s w

hic

h

managem

ent in

corp

ora

tes into

its

str

ate

gic

decis

ion m

akin

g. O

vers

ees

opera

tion o

f th

e c

om

pany’s

ER

M

pro

gra

m. M

eets

private

ly w

ith

repre

senta

tives f

rom

the c

om

pany’s

in

dependent

regis

tere

d p

ublic

accounting f

irm

, th

e S

VP

– Inte

rnal

Audit a

nd t

he G

C. P

rovid

es r

eport

s

to t

he b

oard

. H

um

an R

esourc

es C

om

mitte

e

consid

ers

the im

pact

of

the

com

pany’s

executive c

om

pensation

pro

gra

m a

nd the incentives c

reate

d

by t

he c

om

pensation a

ward

s t

hat

it

adm

inis

ters

, on the c

om

pany’s

ris

k

pro

file

.

Board

overs

ees m

anagem

ent

of

risks inhere

nt

in o

pera

tion

of com

pany’s

busin

ess a

nd

imple

menta

tion o

f its s

trate

gic

pla

n.

Board

perf

orm

s t

his

overs

ight

role

by u

sin

g

severa

l diffe

rent

levels

of

revie

w.

In c

onnection w

ith its

revie

ws

of

the o

pera

tions o

f th

e

com

pany’s

busin

ess u

nits

and c

orp

ora

te functions,

board

addre

sses t

he p

rim

ary

risks a

ssocia

ted w

ith those

units a

nd f

unctions.

Yes. V

erizon h

as a

ro

bust E

RM

pro

gra

m.

Audit C

om

mitte

e

overs

ees E

RM

pro

gra

m,

inclu

din

g the

identification o

f th

e

prim

ary

ris

ks t

o t

he

com

pany’s

busin

ess a

nd

inte

rim

update

s o

f th

ose

risks, and p

eriodic

ally

m

onitors

and e

valu

ate

s

the p

rim

ary

ris

ks

associa

ted w

ith p

art

icula

r busin

ess u

nits a

nd

functions.

No.

The S

VP

-In

tern

al A

uditin

g

assis

ts c

om

pany

in identify

ing,

evalu

ating a

nd

imple

menting r

isk

managem

ent

contr

ols

and

meth

odolo

gie

s t

o

addre

ss identified

risks.

Report

s d

irectly to

Audit C

om

mitte

e.

Not

specifie

d.

Yes.

The

com

pany r

evie

ws

its c

om

pensation

polic

ies a

nd

pro

cedure

s,

inclu

din

g the

incentives t

hat

they c

reate

and

facto

rs that m

ay

reduce t

he

likelih

ood o

f excessiv

e r

isk

takin

g, to

dete

rmin

e

wheth

er

they

pre

sent

a

sig

nific

ant

risk t

o

the c

om

pany.

Based o

n t

his

re

vie

w,

the

com

pany

conclu

ded t

hat

its

com

pensation

polic

ies a

nd

pro

cedure

s a

re

not

reasonably

lik

ely

to h

ave a

m

ate

rial advers

e

eff

ect

on t

he

com

pany.

App

endi

x 1

cont

inue

d

30 director notes the role of the board in risk oversight www.conferenceboard.org

Co

mp

an

y

(no

n-f

ina

ncia

l in

sti

tuti

on

)

Fo

rmal

Ris

k

Co

mm

itte

e/

Ch

art

er?

(Y

/ N

)

Ris

ks d

ele

gate

d t

o c

om

mit

tees

(in

clu

de n

am

e o

f co

mm

itte

e a

nd

d

es

cri

pti

on

of

risks)

Ris

ks r

evie

wed

at

the b

oard

le

vel

wit

ho

ut

co

mm

itte

e

Is “

en

terp

rise r

isk

man

ag

em

en

t”

dis

cu

ssed

?

If y

es,

ho

w?

Is t

here

a C

hie

f R

isk O

ffic

er?

If

yes, to

wh

om

d

oes h

e o

r sh

e

rep

ort

?

Ap

pro

ach

to

all

ocati

on

o

f ri

sk t

o m

an

ag

em

en

t

Co

mp

en

sati

on

ri

sk i

nclu

ded

in

g

en

era

l ri

sk

dis

cu

ssio

n?

If

yes,

ho

w?

co

ntin

ued

See “

Ris

ks

dele

gate

d t

o

com

mitte

es –

H

um

an

Resourc

es

Com

mitte

e.”

No.

Audit C

om

mitte

e r

evie

ws a

nd

dis

cusses w

ith m

anagem

ent

the

com

pany’s

pro

cesses a

nd p

olic

ies

with r

espect

to r

isk a

ssessm

ent

and

risk m

anagem

ent,

inclu

din

g

com

pany’s

ER

M p

rogra

m.

Oth

er

board

com

mitte

es r

eceiv

e r

isk

managem

ent

update

s o

n m

att

ers

in

whic

h t

hey a

re r

esponsib

le for

overs

ight.

Board

receiv

es info

rmation

from

managem

ent

on a

variety

of m

att

ers

, in

clu

din

g

opera

tions,

legal, r

egula

tory

, finance,

reputa

tion a

nd

str

ate

gy a

nd a

ny m

ate

rial

risks involv

ed in e

ach m

att

er.

If

a b

oard

com

mitte

e (

rath

er

than t

he f

ull

board

) re

ceiv

es

an u

pdate

fro

m m

anagem

ent

on a

part

icula

r m

att

er,

the

chairpers

on o

f th

e r

ele

vant

com

mitte

e r

eport

s o

n the

dis

cussio

n to the f

ull

board

during t

he b

oard

com

mitte

e

report

s p

ort

ion o

f th

e n

ext

board

meeting.

This

enable

s

the b

oard

and b

oard

com

mitte

es t

o c

oord

inate

the

risk o

vers

ight ro

le.

Yes. S

ee “

Ris

ks

dele

gate

d t

o c

om

mitte

es

– A

udit C

om

mitte

e.”

None s

pecifie

d.

Mem

bers

of

managem

ent

revie

w

and d

iscuss r

isk

managem

ent

with

board

and p

rovid

e

board

(or

rele

vant

board

com

mitte

e)

with

update

s o

n c

om

pany’s

risk m

anagem

ent

pra

ctices.

No.

P

roxy

filin

g pr

eced

es e

ffect

ive

date

of n

ew S

EC

di

sclo

sure

rule

s.

Not

dis

cussed.

Not

dis

cussed.

Not

dis

cussed.

Not

dis

cussed.

Not

dis

cussed.

Not

dis

cussed.

Not

dis

cussed.

App

endi

x 1

cont

inue

d

director notes the role of the board in risk oversight www.conferenceboard.org 31

Copyright © 2010 by The Conference Board, Inc. All rights reserved. The Conference Board®, and the torch logo are registered trademarks of The Conference Board, Inc.

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About the AuthorsLouis L. Goldberg is a member of Davis Polk’s corporatedepartment, practicing in the mergers and acquisitionsgroup. His practice focuses on public and private mergersand acquisitions, private equity transactions, board andcorporate governance advice, joint ventures, spinoffs anddefensive assignments. Mr. Goldberg is recognized as aleading lawyer in several legal industry publications,including Chambers Global: The World’s Leading Lawyersfor Business. He is a magna cum laude graduate of theUniversity of Cape Town Faculty of Law and earned aLL.M. degree from the University of Cambridge.

Mutya Fonte Harsch is an associate in Davis Polk’s merg-ers and acquisitions group and a practice resources editorfor the firm. She has published a number of articles onmergers and acquisitions matters and corporate gover-nance issues. Before rejoining the firm, she was AssistantGeneral Counsel to Warner Chilcott. Ms. Harsch is admit-ted to the bars of California and New York. She earned aB.A., with honors, from the University of California atBerkeley and a J.D. from the University of California atBerkeley (Boalt Hall) Law School.

About the Series DirectorMatteo Tonello is director, corporate governance research,at The Conference Board in New York. For The ConferenceBoard, Tonello has conducted governance and risk man-agement analyses and research in collaboration with leading corporations, institutional investors, and profes-sional firms. Also, he has participated as a speaker andmoderator in educational programs on governance bestpractices. Recently, Tonello served as the co-chair of The Conference Board’s Expert Committee on ShareholderActivism and as a member of the Technical Advisory Group to The Conference Board Task Force on ExecutiveCompensation. Before joining The Conference Board, he practiced corporate law at Davis Polk. Tonello is a grad-uate of Harvard Law School and the University of Bologna.

About Director NotesDirector Notes is a series of online publications in whichThe Conference Board engages experts from several disciplines of business leadership, including corporategovernance, risk oversight, and sustainability, in an opendialogue about topical issues of concern to member com-panies. The opinions expressed in this report are those ofthe author(s) only and do not necessarily reflect the viewsof The Conference Board. The Conference Board makes norepresentation as to the accuracy and completeness ofthe content. This report is not intended to provide legaladvice with respect to any particular situation, and nolegal or business decision should be based solely on its content.

About The Conference BoardThe Conference Board is the world’s preeminent businessmembership and research organization. Best known forthe Consumer Confidence Index and the LeadingEconomic Indicators, The Conference Board has, for over90 years, equipped the world’s leading corporations withpractical knowledge through issues-oriented research andsenior executive peer-to-peer meetings.