Contents Introduction Management report Appendices Corporate governance Consolidated Financial Statements Company Financial Statements
Protect Rabobank's identity and reputation: A solid reputation
is essential to maintaining stakeholders'fundamental trust in
the bank.
Make healthy risk-return decisions in line with the strategic
objectives: Make transparent choices on the basis of where
capital and resources can be used most efficiently or
appropriately with respect to sectors or concentrations.
These goals are strongly connected, and they can only be
achieved by maintaining sound governance and a strong risk
culture throughout the organisation. Long-term customer
value requires a solid balance sheet, minimised funding costs
and benefits the bank's profitability and reputation. Conversely,
maintaining a solid balance sheet requires a healthy profitability
and a sound reputation.
Risk appetite
Rabobank's risk strategy is embedded in a set of strategic risk
statements directly linked to the Strategic Framework 2016-
2020 along the four strategic themes of complete client focus,
rock-solid bank, meaningful cooperative and empowered
employees.These statements define the high-level boundaries
of the risk appetite within which we must operate.The Risk
Appetite Statement (RAS) further specifies the Strategic Risk
Statements and defines the levels and types of risk Rabobank
is willing to acceptto achieve its business objectives.The RAS
articulates Rabobank's overall desired level of risk exposure,
both quantitatively and qualitatively, and is used in all business
activities to assess the desired risk profile against the risk-reward
profile of a given activity.
The risk appetite at Rabobank group level is an integral part
of the bank's strategy and is incorporated in the organisation's
budget planning where it influences day to day risk-taking.
Entity-specific risk appetite statements further specify the group
risk appetite at entity level. The risk appetite is embedded
across Rabobank Group within principles, policies, indicators,
limits and controls. The combination of a breach management
process and appropriate governance ensures an adequate and
timely response. The risk appetite is reviewed and updated at
least once a year, depending on internal or external events with
material impact.
Risk culture
Rabobank adopts the of three lines of defence model, which
ensures risk management activities are an integral part of
business steering and our culture. Rabobank expects all
employees to focus on long-term relationships with our clients,
and to always act in their best interest. Employees are expected
to be aware of risks and dilemma's in their day to day work, to
carefully consider the interests of all stakeholders, to always be
honest and reliable, and to take responsibility for their actions.
Desirable behaviour is encouraged and undesirable behaviour
is corrected. Rabobank creates an environment in which risks
and dilemmas can be openly discussed and tunnel vision or
group thinking is avoided in daily decision processes. Learning
from mistakes is part of our approach to risk management. This
is complemented with risk awareness and compliance training
programmes for all employees. Risk awareness and our corporate
culture is assessed by management teams and follow-up
actions are taken and monitored as part of regular steering.
Credit Risk Management
The size of our credit (loan) portfolios is stable and supported
by local and global economies the quality has much improved,
evidenced by historic low provisioning and reducing non-
performing loans (NPL).The improved quality has taken place
while we at the same time in our credit risk management
process further tightened the standards that reflect the quality
of our portfolio (Loan Quality Classification). Prudent credit
acceptance policy is typified by careful assessment of clients
and their ability to repay the loan that was granted. As a result,
the risk profile of the loan portfolio is acceptable even in less-
than-favourable economic circumstances. Rabobank aims to
form long-term relationships that benefit both the client and
the bank. An important starting point in the acceptance policy
for business loans is the principle that we know our client well.
We have insight in our clients'sector, business, management,
goals, financials, opportunities and challenges which helps us
manage this risk in the best possible way.
In addition, Rabobank closely monitors developments in the
business sectors in which its clients operate so it can properly
assess their financial performance. Corporate sustainability
also means sustainable financing. Sustainability guidelines
have been established for the credit process next to the use
of standard credit risk management models to estimate PD,
LGD and EAD parameters.To further strengthen our credit
management framework there has been a rationalisation
of our credit model landscape, also in line with the Europe
wide TRIM exercise, which moved ahead with the delivery
of 3 models - counterparty credit risk, mortgage model and
the SME model. Rabobank also uses a wide range of credit
mitigation techniques to reduce specific counterparty credit
risk or country risk. Different modelling methodologies apply to
different portfolios; each model accounts for quantitative and
qualitative risk drivers.The credit risk parameters are used to
calculate the capital requirements.
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