Inhoudsopgave Voorwoord Bestuursverslag Corporate governance
Consolidated Financial Statements Company Financial Statements Pillar 3
both quantitatively and qualitatively and is used in all business
activities to assess the desired risk profile against the risk-reward
profile of a given activity.
Risk appetite is, among other things, defined in terms of
core-tier 1 capital and return on capital
credit risk
single obligor and concentration limits for asset class
and sectors
market risk
interest rate risk in the banking book
operational risk
liquidity risk
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 risk
appetite is embedded across Rabobank Group within principles,
policies, indicators, limits and controls.The Risk Appetite
Statement is decided annually by the Executive Board and
approved by the Supervisory Board. In 2016, sustainability
was integrated in the Risk Appetite Statement for the first time
and addresses non-compliance with Rabobank's sustainability
policies.
The RAS is monitored by benchmarking the actual risk profile
against the risk appetite and discussed on a quarterly basis in
the Executive Board and Supervisory Board Risk Committee.
This ensures that day-to-day operations are executed within the
boundaries 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
edtf3 Rabobank keeps track of external developments and
closely monitors the risks that might affect the
achievement of organisational objectives. Regular and structural
top-down and bottom-up risk assessments are performed to
identify various types of risks, and specific stress tests are
conducted to calculate the impact of adverse scenarios.
An integrated overview of the main risks, the changes to them
and the measures taken to address them are regularly discussed
in the Executive Board and Supervisory Board. Banking is all
about taking and managing risks. When we do business, explore
options or take decisions, we continually assess risks.
Every day, Rabobank takes informed risk decisions on engaging
with (new) customers, granting credit, entering into interest
rate contracts and providing other services to customers.
To manage the material risks, risk and control processes are
designed to ensure that the risks incurred remain within the
bank's risk appetite and that risk and return are appropriately
matched.These processes coverthe regular banking risk
types: credit risk, market risk, interest rate risk, liquidity risk and
operational risks, including compliance risk. In addition, we
acknowledge that we currently face uncertain, volatile and
partially adverse market circumstances that create, among
others, the following risks for the bank:
Business model: Rabobank's earnings model needs to adapt
to the changing economic and political environment, and
to the demands of society. Narrowing spreads between
funding and lending impact the profit margins needed
fora sustainable future for the bank. This is amplified by
increased competition of non-banks and market innovators
using disruptive technologies. Regulatory requirements
put additional (capital) strain on banks. The cumulative
effects of these requirements influence the strategic choices
available to Rabobank, but we manage this through excellent
customer focus in support of our Banking for the Netherlands
and Banking for Food visions, supplemented by a strong
focus on sustainability through our clients. Internally,
we are improving financial performance, strengthening
innovativeness, empowering employees and examining our
products and services portfolio.
Execution power: This includes challenges to improve
customer focus and performance and to meet regulatory
requirements.The change agenda is ambitious and contains
many interdependencies. While we need to preserve our
cooperative heart and the uniqueness of Rabobank, we
also need to be receptive to client behaviours, external
developments and unexpected risks with serious long-
term effects. Our (new) governance leads to more effective
decision-making and timely responses. We manage this
through close monitoring of change initiatives and by
enabling the business in its first-line responsibilities.
Technology continuity: A complex IT landscape, growing
demands on continuity and increasing cyber threats
are continuing challenges.The ongoing digitalisation of
our services improves efficiency and adds value for our
customers. Services need to keep running smoothly while at
the same time systems need to be improved to keep up with
requirements, trends and innovations. We use an integrated
approach and manage dependencies for our core banking
transformation, front-to-back processes and systems.
We closely monitor cyber threats and data privacy.
Data management:This entails timely, sufficient and
accurate data for business and regulatory purposes and
availability of in-depth information for client advice, reporting
and business decisions. Data quality is an important
concern and regulatory requirements (BCBS239) have also
314 Rabobank Jaarverslag 2016