1. Northern Trust Company Global Risk Management
Federal Reserve Bank - Chicago and DePaul University Risk Conference
April 2009
Joyce St. Clair
Executive Vice President
Global Head of Corporate Risk Management

2. Risk Culture at Northern Trust
Northern Trust believes that inherent risks must be managed as close to the source of risk as possible, with the support of risk management specialists and oversight by Corporate Management, Senior Management and the Board of Directors
Board Review Committees
Approves policies, risk appetites and tolerances
Corporate Oversight Entities
Develops and approves policies, risk appetites and tolerances
Business Risk Management Units
Provides regular reporting on key indicators and current initiatives
Joyce St. Clair
Management At The Source Of Risk
Provides daily, weekly, and monthly risk reporting; escalates emerging risks
Discussion of Emerging Risk Topics
(at all levels)

3. Comprehensive Approach for Managing Risk - Example

4. Global Risk Management Governance Structure
Board of Directors
Business Strategy
Committee
Business Risk Committee
Audit Committee
Board
Executive Policy
G L O B A L E N T E R P R I S E R I S K C O M M I T T E E
Management
Implementation
Asset / Liability
Committee
Credit Policy
Committee
Operational Risk
Committee
Regional Risk Committees
Fiduciary Risk
Committee
Compliance
Oversight
Committee
Country/Legal Entity Risk Committees
Market & Liquidity Risk Council
Additional Credit Risk Committees
Additional Fiduciary Risk Committees
Additional Operational Risk Committees
Additional Compliance Risk Committees
BU Risk Committees
Risk policies, appetites/tolerances, reporting and emerging issues flow
from various risk committees through to the Board of Directors

5. Current Challenges
Evolving requirements and increased oversight from regulators
and the U.S. Treasury (TARP)
Ensuring Northern Trust is Basel II complaint while not jeopardizing existing capital adequacy management
Managing expenses under volatile market conditions while evolving risk management capabilities
Continuing focus on challenging credit environment

6. Changes to Address Current Economic/Political Climate
Monitor developing situations
Alert and mobilize resources to respond to occurring events
Plan for events by developing scenarios and testing effectiveness
Institutionalize and globalize the Incident Management Process
Exec. Mgt. meets weekly to discuss emerging risk issues
Board spending more time in interactive discussions, less time on prepared presentations
Greater focus on emerging issues
More attention on scenario analysis and stress-testing to determine capital adequacy
Greater focus on:
Broad-based capital assessments
Deeper analysis on individual risk categories
Use-test validation