Inhoudsopgave Bestuursverslag Corporate governance
pace with external and internal developments and are
combined with internal informative campaigns.
Lessons Learned in which learning from mistakes is
a recurring activity with respect to undesired operational risk
and credit risk events. Sharing experiences is encouraged in
order to avoid repetition in other parts of the organisation.
Risk appetite
edtf 7 The Risk Appetite Statements (RAS) are aligned with the
risk strategy and defines the types and levels of risk
which Rabobank is willing to take in order to achieve its
business objectives.
Risk appetite, is among other things, defined in terms of:
Minimum levels for capital ratios;
Liquidity ratios;
Concentration limits for asset classes and industry sectors;
Market risk ratios;
Operational Risk ratios.
The risk appetite at Rabobank Group level is an integral part
of the bank's strategy. Entity-specific risk appetite statements
further specify the Group risk appetite at entity level. The RAS
is articulated by the Risk Management department and is
approved by the Executive and Supervisory Board.The risk
appetite is embedded within principles, policies and limits
across the Group.
The RAS are monitored by benchmarking the actual and
forecasted risk profiles against the risk appetite and are
discussed on a monthly basis in the Executive Board and
Supervisory Board Risk Committee. This ensures that day-to-day
operations are executed within the boundaries that are set by
the business and risk strategy. Breaches of the risk appetite will
result in immediate action at the appropriate management
level.The risk appetite is reviewed annually by the Executive
and Supervisory Board.
Significant risks and developments
edtf 3 Rabobank keeps track on external developments and
closely monitors the risks that might affect the
achievement of organisational objectives. Regularly top-down
and bottom-up risk assessments are performed in a structured
manner to identify various types of risks and specific stress tests
are being conducted to calculate the impact of adverse
scenarios. The integral overview of the main risks, the changes
in them and the measures taken are regularly discussed in the
Executive Board and Supervisory Board.
Jaarrekening Rabobank Groep Jaarrekening Rabobank
Banking is taking risks. When business opportunities are
pursued, options explored, decisions taken, at the same time
risks are assessed. Rabobank daily takes informed risk decisions
on credit granting, entering interest rate contracts and in its
other services to customers.To control the material risks, risk
management processes are in place which ensure that the
risks are taken within the risk appetite of the bank and that
the return is balanced with the risk.This limits the exposures
to regular banking risk types such as: credit risk, market risk,
interest rate risk, liquidity risk and non-financial risks, including
compliance. Nevertheless, Rabobank has identified some
fundamental residual risks:
Sustained historically low interest rate levels: have an adverse
impact on profitability of Rabobank mainly due to the impact
on the result from Rabobank's interest rate business.
Sustained exceptional market developments: influence the
Value at Risk (VaR) and require continuous mitigation by
adjusting the market risk position based in strict limits.
Unexpected loan losses: despite an effectively diversified
business model and prudent lending criteria loan losses may
be higher than estimated.
Balance sheet imbalance: funding costs may undesirably
increase due to dependence on the capital market and the
increasing regulatory capital requirements.
Increase and complexity of regulation: the additive effect of
new regulations has a direct impact on the available strategic
alternatives and imposes a heavy burden on scarce human
and financial resources.
Negative public opinion: restore of confidence in the financial
sector is an important condition to maintain a healthy
customer base.
Geopolitical and economic instability: geopolitical unrest in
the Eurozone and in the emerging markets and continued
economic instability lead to uncertainty in the financial
markets.
IT systems and security: technology and digitalisation
contribute to more efficient business processes and improved
service but at the same time lead to greater reliance on IT
systems. Cybercrime is a main focus area.
New market entries and disruptive technologies: lead to
increased competition in areas such as payment systems
and credit.
The risks mentioned above are inherent to the business model
of Rabobank. The recent changes of the governance model and
the announced cost reduction are part of the renewed strategy.
Successful implementation of this strategy is of paramount
importance to the future of Rabobank.
323 4. Risk management
