GOVERNANCE OPERATING MODEL Board oversight Performance management and

GOVERNANCE OPERATING MODEL Board oversight Performance management and responsibilities incentives Management accountability Business and Reporting and authority operation principle communication Committee(s) authorities Leadership development and responsibilities and talent programs 01 02 03 04 STRUCTURE OVERSIGHT RESPONSIBILITIES TALENT AND CULTURE INFRASTRUCTU RE Policies and procedures Organizational design and reporting structure Committee(s) structure and charters Technology

COMPONENTS OF GOVERNANCE OPERATING MODEL STRUCTURE OVERSIGHT RESPONSIBILITIES Includes organization design, Defines board oversight reporting structure, committee responsibilities, committee and structures and charters, and management responsibilities, control and support function accountability, management interdependencies hiring and firing authority. TALENT AND CULTURE Enables activities required for effective governance by compensation policies, promotion policies, operating principles, performance management, and training INFRASTRUCTU RE Comprises governance and risk oversight policies, procedures, reports, measures and metrics, management capabilities, and IT and communications support

CONNECTING STRATEGY TO EXECUTION STRATEGY OPERATING MODEL EXECUTION STRUCTURE • Define ambition, purpose and values (Products, markets, customer segments) • Decide where to compete and how to succeed ACCOUNTABILITY (Aligned roles and responsibilities) • Determine specific strategic elements Business Definition Source of growth GOVERNANCE (Fast decisions on critical issues) Critical capabilities WAYS OF WORKING (Culture of collaboration) Key decisions Cost/Profit Targets • Deliver capability-building plan • Demonstrate and reinforce important behaviors • Implement performance management Drivers of value High-priority needs of customers • Implement roadmap CAPABILITIES (People, processes, technology) and feedback loops • Mitigate risks

Board oversight & responsibilities WHAT MAKES AN EFFECTIVE GOVERNANCE OPERATING MODEL The board carries out oversight responsibility across the organization in Management accountability & authority Committee authorities & responsibilities areas such as business and Performance management and incentives risk strategy, organization, financial soundness, and Help define the number, regulatory compliance. terms, and qualifications of Organizational design & reporting structure members, committee responsibilities, reporting and escalation mechanisms, and ways in which board and management committees will interact Well understood authority and accountability for key responsibilities are needed A clear, comprehensive at all levels and in all areas organizational structure of the organization. normally defines reporting lines for decision making, risk management, financial and regulatory reporting, public disclosures, & crisis preparedness & response. Goals, performance measures, compensation, and incentives should reflect an organization’s overall commitment to governance as well as principles of asset preservation and risk taking for reward.

BENEFITS OF AN EFFECTIVE OPERATING GOVERNANCE MODEL IMPROVED GREATER IMPROVED INCREASED CLARITY VISIBILITY COORDINATION EFFECTIVENESS Provide vehicle for the The board could establish Complexity in the board and its committees lines of sight, such as stating governance of a global by clearly defining the risk exposures that should organization requires roles and responsibilities come to its attention coordinated action. 01 02 Specifies the information that the board and its committees require 03 04

MANAGEMENT & SUPERVISORY BOARD AND COMMITTEES TRANSPARENCY, VALUES AND ACCOUNTABILITY ETHICS CORPORATE GOVERNANCE FRAMEWORK CORPORATE GOVERNANCE RISK & PERFORMANCE POLICIES & MANAGEMENT REGULATORY FRAMEWORK MONITORING & INTERNAL CONTROL

DESIGN 09 Continuous Improvement Governance and leadership 02 PR GY ETHICS & LO CULTURE OF Risk Assessments, Due Diligence NO CH TE 08 OC ES S Third-party Compliance 01 COMPLIANCE Testing and Monitoring 07 03 Standards, Policies, Procedures PEOPLE ASSESS 06 05 04 Case Management Employee Training and Investigations Reporting Communication IMPLEMENT

DELOITTE GOVERNANCE FRAMEWORK BOARD GOVERNANCE Governance Strategy Talent Performance Integrity Board of directors RISK Planning Operations Compliance Reporting CORPORATE GOVERNANCE INFRASTRUCTURE Executive management Business units & supporting functions CULTURE

Governance ra teg t St management activities that support effective len Ta y The framework defines board and governance. It helps differentiate between the Management Board Oversight Responsibilities Pe Primary areas of RISK OVERSIGHT rfo rm an areas that management is responsible for. & re ltu ity Cu tegr In ce primary areas of board oversight and the ng ni an Pl Operations Compliance rti R o ep ng

DESIGNING THE MODEL COMPONENTS SUB-COMPONENTS • Committee structure and charters STRUCTURE • Organizational structure & reporting lines • Control and support function roles OVERSIGHT RESPONSIBILITI ES DESCRIPTION • Outlines board and management committee structures, mandates, membership and charters. • Establishes design of governance framework • Delineates organizational structure, reporting lines, and relationships • Highlights role and independence of control and support functions from business owners • Committees authorities & responsibilities • Outlines the type of committees (board & management) & associated responsibilities • Management accountability and authority • Specific functional accountabilities for day-to-day management • Board oversight and responsibilities • Delineates board and management approved policies supporting delegation of authority (decision • Reporting, escalation, veto rights) including reporting, escalation, and veto rights • Business and operating principles • Aligns governance with operating and business principles • Core beliefs and risk culture • Articulates core beliefs and foundation for culture CULTURE • Leadership development • Highlights characteristics of risk culture • Management and incentives • Outlines leadership succession, assessment, and development responsibilities INFRASTRUCTU • Policies and procedures TALENT & RE • Reporting and communication • Technology • Establishes design and content of policy manuals and associated procedures • Outlines type of frequency of internal reporting and communications • Defines scorecards, measures, and metrics to track performance • Aligns technology and governance requirements

CONSIDERATIONS & OBJECTIVES Compliance issues CURRENT STATE Cultural shift Governance and management decision rights Process and system issues Regulatory relations Human resources FUTURE STATE

GOVERNANCE MODEL STRATEGIC LEVEL PROGRAM LEVEL OPERATIONAL LEVEL Bill Johnson Jane Smith Jordan Jones Designation employee@company. com Here are some things this team member can do to help govern the project effectively. • Half yearly meeting • Quarterly review activities • Visiting customer

IMPROVE EXISTING MODEL: 3 -STEP APPROACH 1 Useful steps in this part Define governance operating model requirements Analyze peers at a summary level (for example, by means of their committee charters, which are often publicly available) • Identify potentially useful governance frameworks • Identify applicable regulatory and governance requirements • Consider governance scope and needs, such as Assess the organization’s governance vis-àvis a governance maturity model domestic, global, business line, and those involving existing and contemplated products and processes • Define the current state of governance, as well as gaps and considerations Identify and prioritize governance needs and activities

IMPROVE EXISTING MODEL: 3 -STEP APPROACH Design the governance operating model • Define the desired future-state for the headquarters region, global business Useful steps in this part operations, and control functions, such as risk, legal, compliance, finance, audit, and HR Detailed design of the governance operating model and its components • Define a change-management plan to institutionalize the attitudinal and behavioral changes needed to Develop matrix defining key accountabilities across organization Develop matrix defining decision rights and escalation paths implement the model 2

IMPROVE EXISTING MODEL: 3 -STEP APPROACH 3 Implementing the governance operating model • Create implementation plan to define metrics to measure success • Map governance requirements for org functions and business requirements • Allocate resources to implementation, per priorities and over time as permitted • Define components of review process • Evaluate plan, implementation, and practices USEFUL STEPS o Create an implementation plan in an electronic, visual format that enables the team to track progress on action steps & to log disposition of risks and related issues o Obtain external assistance in creating a workable plan and format and in overseeing implementation, as necessary