Risk Management and Compliance
Risk management goals
The Banking for Food and Banking for the Netherlands strategies bring specific concentration
risks and exposes the bank both in the domestic and international markets to macro-economic,
political, regulatory and social developments. We are intimately aware of those specific risks and
the balance we strike with our strategic choices.
Contents Introduction Management report Appendices Corporate governance Consolidated Financial Statements Company Financial Statements
Our risk management and control framework is designed to
mitigate the current risks we are facing. Each time business
opportunities are discussed and decisions are taken, risks are
assessed against expected returns and risk appetite. Without
taking risks, profitable banking activities are impossible, and
therefore it is also necessary to accept a certain degree of risk.
Every day Rabobank takes informed risk decisions on engaging
with (new) customers, granting credit, entering into interest
rate contracts and providing other services to customers. In the
customers'interest risk and control processes are designed to
manage the material risks.They ensure that the risks incurred
remain within the bank's risk appetite and that risks and returns
appropriately match our strategy.
Risk Management in this way contributes in the realisation of the
ambitions of the organisation, customers and stakeholders alike.
Strengthening Risk Management
In 2017 Rabobank continued to strengthen its overall risk
management framework front to back, including its global risk
teams. We realise this is an ongoing process with a changing
bank and demanding external environment.
One such development is information technology in cloud
computing and services, which has prompted Rabobank to
improve the governance and risk framework of cloud applications.
This includes further analysis of IT architecture and making
strategic choices for Rabobank. The risk assessment process in
the cloud computing business also entails careful consideration
of regulatory and legal requirements and restrictions.
Since the UK vote to leave the EU (Brexit) on 23 June 2016 and
the British government's subsequent invocation of Article 50 of
the Lisbon Treaty (to formally exit the EU), Rabobank has been
analysing and monitoring the group-wide consequences of
Brexit through a Group Brexit Committee. We have analysed
multiple scenarios regarding business and processes, and
certain precautionary measures have already been taken, and
are subject to regular monitoring.
In 2017 we further strengthened the Risk Control Framework
(RCF) and the accompanying tooling in the standing
organisation. The RCF is about execution of organisation-
wide risk and control activities supported by uniform working
methods, tooling, learning programmes and taxonomy for all
operational risk expertise areas. Implementation of a consistent
working method has already begun; enhancing and further
aligning the operating model to the process will maximise
operational effectiveness.
Rabobank is cooperating in theTargeted Review of Internal
Models (TRIM) that was launched by the ECB in 2016. Four
TRIM investigations have been started and two are finished.
The objective ofTRIM is to 'restore credibility, adequacy and
appropriateness of approved Pillar I internal models', to allow
appropriate risk assessment and following capital adequacy
calculation. In the TRIM scope are models for credit risk, market
and counterparty credit risk. Operational Risk models are out
of scope. Rabobank has allocated appropriate resources on this
project that will run well into 2018 and creates the stepping
stone to further improve the model landscape.
Appropriate efforts to enhance our risk reporting are also being
taken in line with the principles of the Basel Committee on
Banking Supervision for effective risk data aggregation and risk
reporting (BCBS 239).These initiatives, based on a principle of
'first-time-right-, focus on improving the overall quality of data,
aggregation and the timeliness of risk-reporting.The increased
transparency and consistency of data of this reporting format
would enable Rabobank to make more thoroughly informed
decisions faster. In addition, real-time risk reporting would
help banks identify and respond to potential risks even sooner.
Rabobank expects to be compliant by 1 January 2019.
Rabobank Annual Report 2017 - Management report
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