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1The Chief Compliance Officer is responsible for establishing and overseeing our Compliance Management Program. Business 2areas incorporate compliance requirements and controls into their business policies, standards, processes and procedures. They 3regularly monitor and report on the efficacy of their compliance controls and our Compliance team periodically independently 4tests to validate the effectiveness of business controls.5Credit Risk Management6We recognize that we are exposed to cyclical changes in credit quality. Consequently, we try to ensure our credit portfolio is 7resilient to economic downturns. Our most important tool in this endeavor is sound underwriting. In unsecured consumer loan 8underwriting, we generally assume that loans will be subject to an environment in which losses are higher than those prevailing 9at the time of underwriting. In commercial underwriting, we generally require strong cash flow, collateral, covenants, and 10guarantees. In addition to sound underwriting, we continually monitor our portfolio and take steps to collect or work out 11distressed loans. 12The Chief Credit and Financial Risk Officer, in conjunction with the Chief Credit Officers, is responsible for establishing credit 13risk policies and procedures, including underwriting and hold guidelines and credit approval authority, and monitoring credit 14exposure and performance of our lending related transactions. Our Chief Credit Officers are responsible for evaluating the risk 15implications of credit strategy and the oversight of credit for both the existing portfolio and any new credit investments. They 16also have formal approval authority for various types and levels of credit decisions, including individual commercial loan 17transactions. Division Presidents within each segment are responsible for managing the credit risk within their divisions and 18maintaining processes to control credit risk and comply with credit policies and guidelines. In addition, the Chief Credit and 19Financial Risk Officer establishes policies, delegates approval authority and monitors performance for non-loan credit exposure 20entered into with financial counterparties or through the purchase of credit sensitive securities in our investment portfolio. 21Our credit policies establish standards in five areas: customer selection, underwriting, monitoring, remediation and portfolio 22management. The standards in each area provide a framework comprising specific objectives and control processes. These 23standards are supported by detailed policies and procedures for each component of the credit process. Starting with customer 24selection, our goal is to generally provide credit on terms that generate above hurdle returns. We use a number of quantitative 25and qualitative factors to manage credit risk, including setting credit risk limits and guidelines for each of our lines of business. 26We monitor performance relative to these guidelines and report results and any required mitigating actions to appropriate senior 27management committees and our Board of Directors. 28Liquidity Risk Management29We recognize that liquidity risk is embedded within our day-to-day and strategic decisions. Liquidity is essential for banks to 30meet customer withdrawals, account for balance sheet changes, and provide funding for growth. We have acquired and built 31deposit gathering businesses and actively monitor our funding concentration. We manage our liquidity risk, which is driven by 32both internal and external factors, centrally and establish quantitative risk limits to continually assess our liquidity adequacy.33The Chief Credit and Financial Risk Officer, in conjunction with the Head of Liquidity, Market and Capital Risk Oversight, is 34responsible for the establishment of liquidity risk management policies and standards for governance and monitoring of 35liquidity risk at a corporate level. We assess liquidity strength by evaluating several different balance sheet metrics under severe 36stress scenarios to ensure we can withstand significant funding degradation. Results are reported to the Asset Liability 37Committee monthly and to the Risk Committee no less than quarterly. We also continuously monitor market and economic 38conditions to evaluate emerging stress conditions and to develop appropriate action plans in accordance with our Contingency 39Funding Plan (“CFP”) and our Recovery Plan.40We use internal and regulatory stress testing and the evaluation of other balance sheet metrics within our Liquidity Framework 41to confirm we maintain a fortified balance sheet. We rely on a combination of stable and diversified funding sources, along with 42a stockpile of liquidity reserves, to effectively manage our liquidity risk. We maintain a sizable liquidity reserve of cash and 43cash equivalents, high-quality unencumbered securities and investment securities and certain loans that are either readily-44marketable or pledgeable. We also continue to maintain access to secured and unsecured debt markets through regular issuance.45Market Risk Management46We recognize that interest rate and foreign exchange risk are present in our business due to the nature of our assets and 47liabilities. Market risk is inherent from the financial instruments associated with our business operations and activities including 48loans, deposits, securities, short-term borrowings, long-term debt and derivatives. We manage market risk exposure, which is 4987 Capital One Financial Corporation (COF)