Banking is predominantly about managing a
multitude of different risks.The Rabobank
Group has opted for a modest risk profile and,
consequently, an even and gradual develop
ment of its financial performance.
Bad debts
Balance sheet and Risk Management Committee
Credit risk
56 Rabobank Group Annual Report 2002
Risk management
The year under review was characterised by the development and
implementation of methods and techniques for translating the vari
ous risk categories into a single heading: economic capital. Banks
hold capital in order to cope with unexpected losses.The economic
capital is a measure of how much capital a bank should hold on the
basis of its risk profile and desired credit rating. Since the Rabobank
Group has the highest rating, the bar has been raised high.
services. It therefore pursues a prudent acceptance policy. Once
granted, loans are carefully managed so that there is a continuous
insight into credit risks.48% of Rabobank Group's credit portfolio
consists of loans to private individuals, which have a very low risk
profile in relative terms.The remaining 52% is a highly diversified
portfolio of loans to business clients in the Netherlands and abroad.
In the year under review, new methods were developed for quanti
fying credit risks, in connection with the bank supervisors' future
more stringent requirements.
The development of bad debts can be seen from movements in
the value of amounts receivable as a percentage of the loans granted
to the private sector by the Rabobank Group.
Within the Rabobank Group, the Balance Sheet and Risk
Management Committee (BRMC) is responsible for balance sheet
management, risk policy, setting risk measurement standards,
broadly determining limits and monitoring developments.The
Rabobank Group has extensive procedures in place for systematic
risk management.
Policy on credit risk puts the clients' interests first.The Rabobank
Group's aim is to offer clients the greatest possible continuity in its
