business model and on the other hand regulations that necessitate adjustments in business
processes. With the introduction of a European Supervisory authority the way supervision is
performed will change. The number of data requests and the requirements in this field are set
to increase even further.
Trust
Society's trust in banks is low. This lack of trust, which has its origins in the credit crisis and the
numerous incidents that have eroded trust throughout the world since then, affects the way in
which banks and banking products are viewed. It is essential for banks to regain this lost trust.
Capital requirements
Rabobank Group is subject to the risk, inherent in all regulated financial businesses, of having
insufficient capital resources to meet the minimum regulatory capital requirements. Under the
current Basel regime, capital requirements are inherently more sensitive to market movements
than under previous regimes. Capital requirements will increase if economic conditions
deteriorate or if negative trends occur in the financial markets.
ICTand cybercrime
New technology and technological developments offer new possibilities for interaction with
clients.They can contribute to efficiency improvements, by making services better and more
cost-effective. It is imperative to keep up with continually accelerating change. The introduction
of new services, such as mobile payments, will also entail changes in our customers' conduct
and a changed risk profile. This will have an effect on the bank's role and its (perceived) added
value for customers. In addition, some services will be provided on a digital basis instead of
through personal contact.
These technological developments offer opportunities, but also form a growing source of risks
in the form of cybercrime. Combining easy access to systems and programs for clients with the
highest possible level of information security and with 24/7 availability continues to be a key
challenge. Service continuity is paramount. Criminal activities via computer systems such as
system disruptions, DDoS, phishing and hacking are on the rise. They are aimed at a wide range
of goals: fraud, extortion, system disruptions for robbing money and/or privacy-sensitive data,
or data corruption.
Risk appetite
EDTF recommendation 2 Determining the risk appetite, drawing up comprehensive risk analyses - for each group entity
and for the group as a whole - and measuring and monitoring risks are important components
of the risk management cycle.
Rabobank deploys scarce and valuable resources: its balance sheet, its capital, its knowledge
and reputation. Rabobank avoids risks that conceivably endanger its continuity or negatively
affect its business model. Rabobank's risk appetite framework defines the bank's risk strategy.
This risk strategy is based on continuity and focuses on:
protection of profits and profit growth;
maintenance of sound balance sheet ratios; and
protection of Rabobank's identity and reputation.
The risk appetite framework identifies quantitative and qualitative risk criteria for specific risks
such as credit risk, balance sheet risk (liquidity risk, interest rate risks and market risk) and
operational risks.
64 Annual Report 2013 Rabobank Group
