Managing risk is an essential part of First Metro's business. We would not have taken the lead in the industry had we not learned early on that calculating risk, hedging against it, using it to one's advantage and understanding how it changes were crucial to our success as an investment bank.
Risk management is a responsibility that rests on everyone in the company, and it begins at the top. The Board of Directors draws up the risk oversight charter and cascades its principles to the Risk Oversight Committee (ROC) and the various units. First Metro has three lines of defense in mitigating risk: (1) the operating business unit, (2) risk management and (3) audit.
A key risk management goal of First Metro is institutionalizing, fostering and strengthening a culture of risk awareness within the organization, including our affiliates and subsidiaries. To this end, we constantly update our risk management manual, a ready reference in identifying, recognizing, measuring, reporting and monitoring risks.
First Metro continues to pursue an enterprise-wide risk management (ERM) system, which we began in 2007. Proactive, vigilant and integrative, the system focuses on risk management for the entire organization.
The ERM emphasizes policy, methodology and infrastructure. Policy involves business strategy, definition of risk tolerance, authorities and disclosures. Methodology covers the measurement of risk in achieving risk-based pricing and risk-adjusted returns. Infrastructure involves the hiring, training and development of people, as well as the organization, operations and technology to support the framework.