Credit risk
CFO CFRO
Group Risk
Management
Credit Risk
Management
Interest Rate Risk
Market Risk
Credit
Committees
(individual
credit decisions)
Economic Capital
Portfolio
Management
Credit Risk
Management
(policy and
portfolio overview)
Funding
Liquidity Risk
Operational
Risk
Principles of risk management
Within Rabobank Group, an extensive system of limits and controls has been put in place
to manage all the different risks. The primary objective of risk management is to protect
the Group's reputation and financial strength. Risk management is based on the following
principles:
- Protecting the Group's financial strength: Rabobank Group controls risks in order to limit
the impact of potential adverse events, both on its equity and on its financial results.
Risk appetite must be proportional to capital. An economic capital framework has been
developed to quantify this.
- Protecting the Group's reputation: reputation is essential for the proper performance of a
banker's profession and needs to be diligently preserved.
- Risk transparency: for a good insight into Rabobank Group's exposure, identification of its
positions is vital. Risks must always be considered as accurately as possible to enable sound
commercial decisions to be made.
- Management accountability: Rabobank Group's business entities are individually accountable
for their results as well as for the risks associated with their operations. A balance must be
found between risk and return, while of course duly observing the relevant risk limits.
- Independent risk control: this is the structured process of identifying, measuring, monitoring
and reporting risks. In order to ensure integrity, the risk control departments operate
independently of the commercial activities.
These principles embed the risk policy throughout the Rabobank Group.
Prudent credit policy, embedding credit risk management
Credit risk is defined as the risk that the bank will suffer economic losses because a counter
party cannot fulfil its financial or other contractual obligations arising from a credit contract.
A credit is each and every legal relationship on the basis of which Rabobank, in its role as
financial service provider, can or will obtain a claim on a debtor by providing a product
(loans and bank overdrafts), a facility or a limit. Next to loans and facilities (with or without
commitment), credit as a generic term also includes guarantees, letters of credit, derivatives
etc. Rabobank Group has a robust framework of policies and processes in place that is designed
to measure, manage and mitigate credit risks.
Rabobank Group's prudent policy for accepting new clients is characterised by careful
assessment of clients and their ability to make repayments on credit granted. As a result, the
loan portfolio has a relatively low risk profile. Rabobank Group's objective is to enter into long-
term relationships with clients which are beneficial for both the client and Rabobank Group.
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Risk management
