Risk Management As partoftheoverall strategy of Rabobankwe havea riskpolicytosupportourstrategicgoals. Banking for Food and Banking for the Netherlands entails specific risks and exposes the bank in both domestic and international markets to macro-economic, political, regulatory and social developments. Sound risk management enables us to serve our customers and satisfy our stakeholders. About this Report Chairman's Foreword Corporate Management Report Appendices Governance Consolidated Financial Company Financial Statements Statements Without taking risks, profitable banking activities are impossible, which is why we must accept a certain degree of risk. Every day Rabobank takes informed risk decisions while engaging with (new) customers, granting credit, entering into interest rate contracts and providing other services. In the customers'interest, we design risk and control processes in order to manage the material risks. We employ a comprehensive approach to risk management, so that we may mitigate the risks we face with a solid risk management framework without quenching our appetite for risk. This framework is yearly evaluated and adopted by the Managing Board. Our risk management activities are designed to help realize the ambitions ofthe organization, of our customers and of our stakeholders. Strengthening Risk Management in 2018 We further strengthened our overall risk management framework front to back by taking a holistic perspective on risk. All risk and risktypes are identified to provide an integrated risk profile ofthe business. We realize this is an ongoing process in a bank that is continually changing and in a demanding external environment. Some of these elements with which we aim to strengthen the risk management framework are: Information technology in cloud computing and services, has prompted Rabobank to improve the governance and risk framework of cloud applications. This includes a further analysis of IT architecture and necessitates making strategic choices. The risk assessment process in the cloud computing business also requires 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 invoked Article 50 ofthe Lisbon Treaty (in ordertoformally exitthe EU), Rabobankhas been analyzing and monitoring the group-wide consequences through a Group Brexit Committee and a Brexit Oversight Committee. After analyzing multiple scenarios regarding business and processes, we have already taken certain precautionary measures, which are subject to regular monitoring. We further improved the Risk Control Framework (RCF). The RCF concerns the execution of organization-wide risk and control activities supported by uniform working methods, tooling, learning programs and the taxonomy of all operational risk expertise areas. Next to the specific risks and controls in each department, we strengthened our RCF by adding oversight themes (e.g. Compliance, Legal, and HR) which apply within (a substantial part of) Rabobank Group to the monitoring cycle. In addition to providing better insights in our risks and controls, the inclusion of these themes also raised awareness throughout the bank. Rabobank took part in the 2018 EU-wide stress test conducted by the European Banking Authority (EBA), in cooperation with De Nederlandsche Bank (DNB), the European Central Bank (ECB), and the European Systemic Risk Board (ESRB). The results will assist the competent authorities in assessing Rabobank's ability to meetapplicable prudential requirements under stressed scenarios. The outcome confirmed the robustness of our capital position. During 2018, we spent considerable effort to strengthen the risk data aggregation in line with the BCBS239 regulations. These capabilities and internal risk reporting practices, will further enhance our (risk) management and decision making processes. A number of initiatives have focused on the overall improvement of data quality, aggregation and risk-reporting timeliness. Such improved reports enable us to make decisions faster, based on more transparent and consistent data, and they allow us to improve the quality of fact-based decisions. We further enhanced the strength of our compliance risk management framework. This amongst others includes implementation of measures that build on our capacity to prevent money laundering and the financing of terrorism. Our interest rate riskframework has been redesigned amongst others in orderto better cope with the continuous low interest rate environment. Despite our efforts to continually improve our risk management framework losses and incidents cannot always be avoided. Annual Report 2018 - Management Report 59

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Annual Reports Rabobank | 2018 | | pagina 61