Risk Management
RISK MANAGEMENT COMMITTEE CHARTER
Purpose
The Committee's primary purpose is to oversee management's compliance with all
Capitol Bancorp Limited
regulatory obligations arising under applicable federal and state banking laws,
rules and regulations. Additionally, the Committee shall oversee management's implementation
and enforcement of
Capitol Bancorp Limited's
Risk Management Policies and Procedures.
Committee Membership
The Committee shall consist of three non-management members of the Board of Directors
appointed by the Board of Directors.
Meetings, Structure and Operations The Committee shall review this
Charter on an annual basis. The Committee shall also perform an evaluation of its
performance at least annually to determine if it is functioning effectively. The
Committee shall provide this self-evaluation to the Board.
The Committee shall meet quarterly in conjunction with the regularly scheduled Board
meetings. The Committee may meet in executive session at any time. The Committee
will meet periodically with the Chief Risk Management Officer and/or any other member
of management in separate executive sessions if desired.
The Committee shall designate a secretary from the Committee membership to record
the minutes of the meetings.
Responsibilities
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The Committee shall ensure that the Company is taking appropriate measures to properly
balance risks and rewards in the areas of credit, operations and technology. The
Committee shall periodically review and approve the Company's risk management framework,
including the development of effective policies, processes and procedures.
The Committee shall review information relating to compliance with both external
regulations and internal policies.
The Committee shall review and ensure proper and timely management responses to
all issues identified in all audits (whether internal or external) of Capitol Bancorp
Limited or any of its affiliated entities as may be undertaken from time to time
as directed by the Committee.
The Committee shall work with the Audit Committee of the Company's Board of Directors
to ensure that any and all audit related deficiencies identified in any audit or
order are properly addressed and that the Audit Committee is informed of management's
progress in responding to any audit or order.
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Risk Management
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Credit Risk. Management shall develop and maintain
a lending policy which shall be discussed by the Committee and management. Following
such discussion and after taking into consideration any matters as the Committee
may deem advisable and appropriate, including management's recommendations, the
Committee shall annually review the Loan Policy of the Company and its affiliated
banks. In addition, the Committee may authorize management to develop and implement
any additional detailed policies or procedures relating to credit risk.
The Committee shall review matters relating to specific portfolios and/or specific
industries; non performing assets and owned real estate of the Company, charge offs
and the level and adequacy of the allowance for loan and lease losses; corporate
limits on lending, such as house limits, and industry concentration limits. Additionally,
trends in the economy in general and in the lending industry in particular relating
to credit risk should be reviewed.
The Committee shall, from time to time, receive reports and information from the
Company's credit risk review including an annual examination review schedule prepared
by the credit risk review. The head of credit risk review shall report to both the
Committee and to the Company's management. The Committee shall also be entitled
to request such other reports and information, including relevant forecasts as they
may deem desirable and appropriate from external or internal sources, including
from other Committees of the Board of Directors, and shall similarly provide access
to its reports and information.
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Operational Risk. Management shall develop and maintain
an Operational Risk Policy which policy shall be discussed by the Committee with
management. Following such discussion, and after taking into consideration any matters
as the Committee may deem advisable and appropriate, including management's recommendation,
the Committee shall annually review the Operational Risk Policy of the Company and
its affiliates. In addition, the Committee may authorize management to develop and
implement any additional detailed policies and procedures relating to the operational
risk as may be consistent with the Operational Risk Policy.
The Committee shall review management reports relating to operational risk issues
in areas including but not limited to internal and external fraud; development of
material products and services; technological risks and technology strategies; business
disruption and system failure; and business practices generally.
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Compliance Risk. The Committee shall ensure that
the Company is taking appropriate measures to address all existing regulatory requirements,
and new requirements that may be enacted hereafter, including those under the Bank
Holding Company Act, the Patriot Act, the Bank Secrecy Act and similar laws, rules
and regulations.
Authority
Power to Contract. The Committee shall act completely
independent of management and have the power and authority to contract with third
parties for advice or to accomplish the terms or purpose of any order; meet as a
Committee with or without the presence of any member of senior management as determined
to be necessary by the Committee; and meet with any third party, including any bank
regulator or other regulatory agencies, without the presence of senior management
as desired by the Committee.
The Committee shall have the authority to retain and terminate any risk management
or any other consultant to be used to assist in the evaluation of Capitol Bancorp
Limited and any of its affiliates' risk management and compliance activities by
the Committee; to approve such consultant fees and other retention terms; and obtain
advice and assistance from internal or external legal, accounting or other advisors.
The Committee shall report to the respective boards of both the Company and any
of its affiliated banks on the activities of the Committee as appropriate.
Reliance
In performing their responsibilities, Committee members are entitled to rely in
good faith on information, opinions, reports or statements prepared or presented
by one or more officers or employees of Capitol Bancorp Limited whom the Committee
members reasonably believe to be reliable and competent in the matters presented.
Additionally, reliance may be placed on counsel, independent auditors or other persons
as to matters which the Committee member reasonably believes to be within the professional
or expert competence of such person.
Finally, the Committee may rely on another Committee of the Board of either the
Company or any of its affiliated banks as to matters within its designated authority
which the Committee members reasonably believe to merit confidence.