4.2 Risk management organisation
Inhoudsopgave Bestuursverslag Corporate governance
edtf s Two departments within Rabobank Group share the
responsibility for central risk management. The Risk
Management department is responsible for the overall risk
management framework and more specifically for policies
regarding interest rate, market, liquidity, currency and non-
financial risks, as well as for the credit risk policy at portfolio
level. Kredietrisicomanagement (KRM) is in charge of the policy
for accepting new clients in terms of credit risk at individual
customer level.
Rabobanktakes a 'three lines of defence'approach to risk
management to ensure adequate oversight and to provide
a clear division of activities and responsibilities in risk
management. It aims to provide clarity for every employee
within the bank, with regard to their role and the level of risk
awareness that is expected from them. In this approach the
business is the first line of defence, being the 'risk owners'and
making risk return trade-offs in their (daily) activities. As well as
being responsible for the results, execution, compliance and
effectiveness of risk control.The Risk Management department
is the second line of defence and organisationally independent.
It is providing oversight, guidance and approval as well as
setting frameworks, rules and advice, facilitating, monitoring
and reporting and challenging the business in their risk
management activities and risk-return considerations to ensure
that risk ownership is taken. The third line of defence includes
internal audit and external audit. Internal audit assesses
the quality and the effectiveness of the governance, risk
management and control processes and recommend solutions
to optimise them.
The Risk Management function is organised as follows:
1. Chief Risk Officers (CRO) - The major entities 'Aangesloten
Banken Bedrijf'(Local Rabobank's Business) and 'Wholesale,
Rural Retail' in addition have their own CROs who
are physically part of the entity to effectively steer risk
management activities, while retaining their independent
second-line responsibilities and independent reporting line.
2. Riskteams -The risk management organisation includes three
highly specialised functional teams:
The Credit Risk team, which manages the credit portfolio at
aggregate Group level and sets policies and limits, carries
out performance analyses, constructs models and reports
to senior management.
The Balance Sheet Risk team, which establishes the
policies and the limits framework and measures the risk
profile for balance sheet management (Asset Liability
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Management), liquidity, funding, market risk and internal
settlement interest rates.
The Non-Financial Risk team, which records, analyses and
reports on the operational risk framework, including
the responsibility for operational continuity, IT risk and
Group insurance.
These riskteams work together with the Integrated Risk
Team, which takes a holistic view of Rabobank's risk profile
based on a strong risk governance and culture, strategic
planning, capital, stress testing and prudential legislation.
3. Support teams - Specialist support and other activity teams in
relation to:
Model validation for the independent validation of risk
management models and organisation.
Projects, data, processes and systems for the management
of risk-related systems and data collection for risk projects
and process optimisation.
Management support for strategic planning (such as
Human Resources and budget).
Risk decision
edtf s The CFRO is responsible for the execution of risk
management activities for the entire Rabobank Group.
The Risk Management organisation is led by the Head of Risk
Management and reports to the CFRO. From January 1 st 2016
onwards, the CFRO responsibility is taken over by the
CRO function.
Risk management committee structure
At Rabobank Group two Executive Board committees
are established for risk management with both having
three permanent members from the Executive Board, and
a mandate to take decisions on behalf of the Executive Board.
These committees are:
1Asset Liability Committee (ALCO) Group - First line of
defence committee, with risk optimization responsibilities for
deciding on discretionary balance sheet risks for the Group.
The ALCO Group is also responsible for optimizing Rabobank's
mix of capital sources and optimizing the use of transactions
(portfolio sales, securitizations etc.) of assets as both a capital
and funding tool.
2. Risk Management Committee (RMC) Group - Second line
of defence risk management committee, ultimate arbiter
on risk management issues and guarding the risks taken by
Rabobank.The RMC Group is responsible for risk appetite,
limit setting, monitoring, intervening when appropriate and
policing etc.
324 Rabobank Jaarverslag 2015
