4.2 Risk management organisation
Inhoudsopgave Voorwoord Bestuursverslag Corporate governance
Consolidated Financial Statements Company Financial Statements Pillar 3
increased substantially. We are unifying our steering of data
management and data governance projects.
Business conduct: Conduct issues impede public trust and
may affect Rabobank. Regulatory scrutiny has continued
to increase since the start of the financial crisis and has
resulted in hundreds of billions in fines for product suitability,
sanctions and market abuse in the financial services industry.
Moreover, strict adherence to legislation is no longer
sufficient. Most issues have long lead times, both in discovery
and in remediation so (legacy) conduct issues may continue
to emerge. We are furher improving the implementation of
regulations, client onboarding, the risk control framework,
customer integrity and employee awareness.
Employees: Keep staff fully engaged during a transition
period and maintain a healthy flow of key positions.
Although collaboration across and between departments
has improved, our staff reduction inevitably impacts all
employees. Staff mobility and a change-mindset are needed,
in addition to a sound risk culture in which risks are identified,
escalated and managed proactively and in a timely manner.
Our strategic HR improvements focus on performance
management, talent management, diversity and an adaptive
way of working.
Balance sheet:This includes funding gaps, capital availability
and respective pricing. Serving the Dutch society and
the food agri sector means continuously balancing our
strategic focus and the potential risk of concentration in
assets and liabilities. We are reducing our balance sheet
through proactive portfolio management and advancing our
planning and budget processes.
External environment: These factors include continuing
economic instability, climate change, serious geopolitical
unrest and emerging market contagion. A potential
economic downturn poses threats to worldwide growth
and adds to financial market uncertainty. Climate change
may negatively impact the business of our customers,
so sustainability is becoming increasingly important to
them. We support them in achieving a long-term social
and ecological balance.The eurozone is under pressure, as
tensions increase between European countries, growth in
China is slowing down and developments in other emerging
markets could have a contagious effect on trade. This may
result in protectionism and the freezing of world trade. We are
monitoring macro-economic and geopolitical developments
closely and enhancing our focus on sustainability and
portfolio management, including stress testing.
Every Rabobank employee is involved in addressing and
managing risks on a daily basis. Rabobank has adopted
the 'three lines of defence' model to provide clarity on the
responsibilities for risk and control activities. This clarity of
responsibilities results in coordinated, efficient and effective
risk and control activities throughout the bank.The three lines
of defence approach lays the foundation for the overall risk
governance in Rabobank.
The Risk Management function is organised in units which can
be divided in three main groups:
1.Risk profile governance: monitoring of the Group
risk exposures and maintenance of the risk management
governance, framework, models and data:
a ALM Analytics: interest rate risk, funding liquidity risk,
ownership of models for credit, provisioning and ALM,
project management and risk management systems;
b Integrated Risk: capital risk management and stress
testing, risk framework and governance including
group risk appetite and risk committees, regulatory
oversight, supervisory relations and recovery resolution
management.
2. Business domains: implementation and enforcement of the
risk framework, provide boundaries, challenge and oversight
within entities, subsidiaries and at group level:
a Risk Retail NL:
b Risk Wholesale Rural Retail includes market risk policies
and methodologies, and second line monitoring of
Treasury (except ALM) and Portfolio Management;
c Risk IT Operations includes model validation.
3. Functional expertise: policy development and delivery of
support to the business:
a Credit: credit and development of (provisioning)
policies, credit approval and credit risk monitoring and
reporting (e.g. portfolio, concentrations, country limits),
transactional risk committees;
b Financial Restructuring Recovery (FR&R): recovery and
restructuring of credit for clients at risk of financial distress,
accountability for provisioning and signoff-related policies;
c Operational Risk: expertise centre on operational risk,
including BCM and group insurances (reporting into
RMC RG).
315 4. Risk management