High level of creditworthiness:
risk management
Prudent risk policy and moderate risk profile
General
www. ra bo ba n k.co m/i r
Rabobank Group pursues a prudent risk policy with an emphasis on a moderate
risk profile. The turnaround in the economic recovery in the second half of the
year fuelled an increase in value adjustments. Rabobank Group has only very
limited exposure to European government bonds that are currently perceived by
the market as being less creditworthy. Greek government bonds and state-
guaranteed bonds have been written down by more than 70%. The capital
position was strengthened further and the liquidity position remained resolutely
robust. In the year under review, EUR 42 billion in long-term funding was raised,
which amply exceeded the annual budget.
Introduction
In addition to describing the principles underlying our risk management policy and how we
organise our risk management, this section covers the specific risks that Rabobank Group
incurs, i.e. credit risk, country risk, interest rate risk, liquidity risk, market risk, currency risk and
operational risk. These risks will also come into play in 2012. In addition, the bank is exposed to
other risks, and its profit and equity depend on the banking environment, general economic
conditions, government policies and regulations. Both Rabobank itself and the Dutch Central
Bank (DNB) have formulated standards concerning Rabobank Group's organisation and control.
Rabobank's organisation and control are subject to the Dutch Financial Supervision Act,
including subordinate 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. In 2011, much focus was placed also on the
implications of future regulatory requirements, including those of Basel III, the Foreign Account
Tax Compliance Act (FATCA) and the Dodd-Frank Act.
Risk management organisation
Risk management is performed at different 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, the Rabobank Group Policy Credit Committee and the Group
Operational Risk Committee. The Supervisory Board regularly reviews the risk exposure of
Rabobank Group's activities and portfolio, with the Audit, Compliance Risk Committee (ACRC)
preparing the decision-making processes in the Supervisory Board. The CFO is responsible for
Rabobank Group's risk policy. Two directorates share responsibility for the risk policy. Group Risk
Management is responsible for overall risk management and more specifically for the policy
regarding interest rate, market, liquidity, currency and operational risks, as well as for the credit
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Strategic Framework High level of creditworthiness: risk management