Risk management
Prudent risk policy and moderate risk profile
Rabobank Group pursues a prudent risk policy with an emphasis on a
moderate risk profile. Allocations to the allowance for loan losses were
down in 2010 compared with one year earlier owing to the economic
upturn. This resulted in a significant drop in bad debt costs. In line with
its risk profile, Rabobank has a very limited exposure to European
government bonds that are currently perceived by the market as less
creditworthy. The capital position was strengthened further and the
liquidity position remained resolutely robust. Over EUR 40 billion of long-
term funding was raised, which was more than anticipated in the annual
budget. The impact of the credit crisis on profit amounted to EUR 67
million after taxation.
Risk management
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Both Rabobank itself and the Dutch Central Bank (DNB) have formulated standards concerning
Rabobank's organisation and control. Rabobank's organisation and control are subject to the
Dutch Financial Supervision Act, including derived legislation based thereon, and regulations
imposed by both DNB and the Netherlands Authority for the Financial Markets (AFM) in their
capacity as regulators.These legal and regulatory requirements form Rabobank Group's
framework for the design of the organisation and control of its activities.
Rabobank will continue to be faced with the significant risks described in this section during
2011In addition, it is exposed to other risks and its profit and equity depend on the banking
environment, general economic conditions, government policies and regulations.
Risk management organisation
Risk management is performed at various levels within Rabobank Group. At the highest
level, the Executive Board determines the risk strategy, policy principles and limits under the
supervision of the Supervisory Board and is advised by the Rabobank Group Balance Sheet
and Risk Management Committee (BRMC-RG) as well as by the Rabobank Group Policy Credit
Committee. The Supervisory Board regularly reviews the risk exposure of Rabobank Group's
activities and portfolio. The CFO is responsible for the implementation of the risk policy
at Rabobank Group. Two directorates share responsibility for the risk policy. Group Risk
Management is responsible for the policy regarding interest rate, market, liquidity, currency and
operational risks, as well as for the credit risk policy at portfolio level. Credit Risk Management
is responsible for the policy for accepting new clients in terms of credit risk at individual
customer level. Moreover, within each group entity, risk management is the responsibility
of independent risk management departments.
Risk management principles
Within Rabobank Group, an extensive system of limits and controls has been put in place to
manage risk.The primary objective of risk management is to protect Rabobank Group's
reputation and financial soundness. Risk management is based on the following principles:
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Annual Report 2010 Rabobank Group
