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.
Management Report Appendices Governance
Consolidated Financial Company Financial
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