About this Report Chairman's Foreword Corporate Management Report Appendices Governance Consolidated Financial Company Financial Statements Statements The world of financing and lending is always changing. Plenty of individuals and organizations are prepared to lend risk/ venture capital to third parties. For that reason, we are developing crowdfunding initiatives. Regulators and new regulations are having a growing impact on the ways banks can provide their services. Regulatory impact is a strategic risk. Refer to the Risk Management chapter. We have a diversified loan portfolio in different sectors and countries. Our Risk Appetite Statement sets sector and country limits that we use to closely monitor the sectors and countries in which our clients operate. Global population growth, aging and the growing middle class will change demand for food both in volume and quality. This will be an important growth driver for our clients who provide the world with food and we will continue to support them. Climate change is a bitter reality. Despite the intentions and ambitions of the Paris climate agreement, the world is warming up, posing risks for the environment and the food security of communities. We use the UN Sustainable Development Goals as guidelines in our efforts to reduce hunger and poverty in the world. Banks have been asked to take responsibility to mitigate these threats. Rabobank is therefore participating in different initiatives such as the World Economic Forum and the Dutch Climate Agreement talks. Sustainability is a strategic risk. For more information, refer to the Risk Management chapter. The global trend of urbanization continues unabated, especially in the Netherlands. Some 55% of the world's population currently live in cities and this number is likely to rise to 68% by 2050. This poses the risk of overheating the housing market. As a large mortgage provider in the Netherlands, Rabobank closely monitors this trend. Geopolitical unrest is undiminished and trade wars are reshaping the global economy. The economy is a strategic risk. For more information, refer to the Risk Management chapter. Vulnerability and uncertainty in society are rising. Society needs the business community in general, and banks in particular, to show social responsibility.To address these issues we kick-started major programs inspired by our mission 'Growing a better world together.' For more detailed information about Rabobank's Risk Management, please refer to the Risk Management chapter. Value Creation Inputs Our value creation model shows the key inputs we use: capital (financial capital), employees (human capital), knowledge, IT (intellectual capital) and partnerships (social capital). These are pivotal inputs to our business model, along with our mission, vision, strategy, and our products and services. Finally, the output and impact section of the value creation model is structured around our strategic cornerstones. For more detailed information, see the downloads. Human Capital In carrying out our strategy, Rabobank remains focused on human capital and empowering employees by encouraging continuous learning (training expenses EUR 1,906 per FTE), craftsmanship and entrepreneurship. Rabobank employs over 41,861 fulltime employees and believes that diversity improves performance and creativity within the bank. For more detailed information, and for risks and dilemmas concerning Fluman Capital, see the chapter Empowered Employees. Social Capital As a customer-focused cooperative bank with 1.9 million members and 8.3 million customers, Rabobank takes its role as a socially responsible bank seriously. We participate in many local, sector and supply chain initiatives; we support both businesses and private customers and we actively promote sustainability. Rabobank allocated 48.8 million euro of our net profit to local community initiatives on a notfor-profit basis in the Netherlands. On top of that Rabobank announced a partnership with UN Environment (AGRI3Fund) for clients to stimulate forest protection and sustainable agriculture. We are also a member and co-chair of the Climate Smart Agriculture Working Group of the WBCSD. We engage with stakeholders who directly and indirectly affect our organization. We are committed to a strategic, constructive and proactive dialogue with all our stakeholders: clients, members, employees, investors, non-government organizations, government agencies, media, politicians, supervisory bodies, other banks, fintechs and start-ups. These are the most influential stakeholder groups connected with our organization. We engage with them through member councils, client feedback platforms, client and employee surveys, participation in sector initiatives, and other means. Our Managing Board Members meet with clients, employees, politicians and other stakeholders to discuss ourstrategic progress, receive theirfeed back on ourcontribution to society and debate developments in the financial sector, both generally and in specific relation to Rabobank. For more detailed information, and for risks and dilemmas concerning Social Capital, see the Meaningful Cooperative chapter. Intellectual Capital Rabobank's intellectual capital input encompasses more than 120 years of banking knowledge and expertise in Food Agri and other sectors. We use our knowledge base to offer clients innovative products and services in line with ongoing economic Annual Report 2018 - Management Report 10

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Annual Reports Rabobank | 2018 | | pagina 12