BMO presention RBC CEO conference

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(No Transcript)
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Background

• Harris Financial Corp is owned by BMO Financial
  Group, based in Toronto. BMO Financial Group
  provides a broad and comprehensive range of
  retail banking, wealth management and investment
  banking products and solutions. Our financial
  services professionals provide access to services
  our customers require across our enterprise. We
  serve our clients through three operating groups
  Personal and Commercial Banking, Private Client
  Group and Investment Banking Group.
• Harris goal is to be the leading personal and
  commercial bank in the U.S. Midwest. Our
  community banking strategy leverages strong local
  leaders focused on exceptional customer service,
  offering a broad range of products and services
  through an expanding distribution network. This
  approach underlies our successful growth in the
  highly competitive and fragmented Chicago market
  and provides us with a strategic advantage when
  entering new markets. Strategies include
• Provide a best-in-class customer experience by
  emphasizing a strong performance culture and
  putting our best people in key positions with
  clear accountabilities.
• Align our retail, business and wealth management
  offerings to meet all of our clients needs.
• Expand our distribution network through a
  combination of acquisitions and new branches.

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BMO/Harris Structure Legal, Audit, Compliance,
and Risk

• Risk, Legal, and Compliance all report through
  the same executive chain of command. Audit is
  independent. This consistency allows for ease of
  communication, and consistent message in how we
  work with the Lines of Business (LOBs)
• Disciplines are aligned enterprise-wide
• The U.S. heads of each discipline report
  independently to Harris Board or Committees of
  the Board

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Group Mandates

• Compliance Mandate U.S. Corporate Compliance is
  responsible for the monitoring and oversight of
  regulatory risk within the U.S. Compliance
  performs independent reviews of controls in place
  to manage regulatory risk.
• Audit Mandate Corporate Audit Division provides
  an independent assessment as to the effectiveness
  of internal control within the Enterprise. Audit
  performs independent reviews of controls in place
  to manage all risk types.
• Risk Management Mandate Risk Management ensures
  the organizations credit, market,
  liquidity/funding, fiduciary and operational
  risks are understood, quantified, documented,
  mitigated where appropriate, aggregated where
  necessary and constrained in keeping Corporate
  Policy. Risk management facilitates risk and
  control self assessment (RCSA) sessions with
  the lines of business.
• Legal Department Mandate Law Department is
  responsible for management of legal services
  enterprise-wide across the Enterprise, including
  (without limitation) the management of litigation
  matters and external legal counsel management,
  and providing advice and recommendations to LOBs
  and other internal groups on their legal
  (including fiduciary) risks and mitigating their
  legal (including fiduciary) risk exposure.
  Fiduciary Risk is a subset of Legal Risk. Legal
  oversees the resolution of compliance and
  litigation matters that may result in legal or
  regulatory sanctions.

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Is Structure Effective? How to maximize
information sharing

• Legal, Audit, Compliance, and Risk Management
  meet on a frequent basis
• All new products and revised policies are
  reviewed by Legal, Audit, Compliance, and Risk
• Audit reviews the work performed by Compliance
  prior to performing a review and adjusts their
  scope based upon work done by Compliance. To be
  able to rely on their work, Audit performs a full
  audit of Compliance every 12 months
• Audit and Compliance obtain most current RCSA as
  part of planning process for reviews
• Audit is copied on all Compliance reports, and
  Compliance is copied on all Audit reports these
  reports are used in planning process
• Legal, Audit, and Compliance are invited to all
  independently facilitated RCSA sessions that are
  managed by Risk
• Compliance meets with Legal before reviews.
  Legal is copied on all Compliance reports
• Reports to Audit Committee are coordinated to
  reduce duplication Legal and Audit review
  Compliance Report. One report is produced for
  Communications with Regulators that includes
  input from all three areas.
• Compliance developed a universe document
  detailing all business units and the regulations
  applicable to those units. Compliance worked
  with Legal, Audit, and Risk to review the
  document in detail, and obtained their
  concurrence on its completeness. Each group
  reconciled universe to their population
  document.

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Is Structure Effective? What to watch out for

• Areas that are heavily regulated result in more
  overlap. Areas such as trust, broker-dealer, and
  registered investment advisors. We work
  closely to reduce overlap, but some naturally
  exists.
• Challenge exists in managing the need and desire
  of primary banking regulator to have an
  enterprise-wide view of compliance risk
  management, with the separately regulated
  subsidiarys primary regulators need and desire
  to have the compliance staff an embedded part of
  their entity. We manage this through dual
  reporting structures, which adds complexity.
• Legal, Audit, Compliance, and Risk are all
  independent of the line of business, so who
  works with the LOB to implement corrective
  action? Need to have the ability to cross that
  line or LOB ends up having issues that they
  cannot address.
• Issues that are reported to executive management
  and the Board need to be careful that as issue
  is presented by various areas giving their point
  of view or spin, there is consistency in how
  the issue is portrayed, and that the facts are
  accurate. Risk having item reported several
  times and more risky is that item is reported
  differently based upon who is making the report.
• Risk that one area assumes another area is
  covering something when in fact they arent
  risk of white space. For example, Audit
  assumed Compliance was doing something or Risk
  was covering it, when Risk and Compliance thought
  Audit was covering it.

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Is Structure Effective? Key to Success

• COMMUNICATE
• COMMUNICATE
• COMMUNICATE