2015 Corporate Responsibility Report

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Board Oversight of Risk

The Board has four standing committees: audit committee, compensation committee, governance committee and policy committee. A summary of the duties of each committee is in our 2016 Proxy Statement. Each of the committee charters is posted on the Northrop Grumman website.

The Board is responsible for overseeing our risk-management activities among other duties. Each of our Board committees assists the Board in this role. The audit committee focuses on risks that could affect our financial performance and receives reports from management addressing the nature of material financial risks and how we respond to, and mitigate, these risks. The audit committee also reviews the company’s periodic filings with the Securities and Exchange Commission. The compensation committee reviews a risk assessment of our compensation programs and, together with its independent compensation consultant, evaluates the mix of at-risk compensation linked to stock performance. The governance committee regularly reviews our corporate governance policies and practices. The policy committee assists the Board in identifying and evaluating global security; political, budgetary, environmental and sustainability issues; health and safety matters; and trends that could impact Northrop Grumman business. The policy committee also receives a periodic report from management on our ethics and corporate responsibility programs including a review of the annual Corporate Responsibility Report.

The Board also receives regular reports on the activities of the company’s Enterprise Risk Management Council, which seeks to identify the most significant risks and ensure effective mitigation programs are in place for each risk.