AFD - Universal Registration Document 2020

RISK MANAGEMENT Risk management

4.3.3.3 Monitoring of major counterparty risks The monitoring of the risks of sovereign counterparties is described in Paragraph Ǿ 6.2.5.1. 4.3.3.4 Monitoring the risks of non-sovereign counterparties The monitoring of the risks of non-sovereign counterparties is described in Paragraph Ǿ 6.2.5.1. 4.3.4 Comprehensive interest rate, foreign exchange, liquidity and Ǿ market risks Asset and liability management covers the management of liquidity, interest-rate and foreign-exchange risks as well as counterparty risk management for financial activities. AFD is responsible for financing the operations of its main subsidiaries and holds most of the Group’s asset and liability management risks on its balance sheet. The key components of AFD’s financial and asset and liability management strategy are submitted to the Board of Directors every year for approval. These components include: P limiting exposure to liquidity risk; P ensuring sustainable and steady interest revenue streams for AFD; P limiting exchange rate exposure to the minimum necessary for temporary operational needs; P limiting counterparty risk exposure from financial activities by carrying out market and investment operations with only the counterparties that have the highest credit ratings. Limits and management criteria are set based on guidance from AFD’s Board of Directors. In 2018, this body carried out the annual review of the system. 4.3.4.1 Liquidity risk Liquidity risk is described in Paragraph Ǿ 6.2.5.2. 4.3.4.2 Interest rate risk Interest rate risk is described in Paragraph Ǿ 4.1.1.4. 4.3.4.3 Currency risk Foreign-exchange risk is described in Paragraph Ǿ 6.2.5.4. 4.3.4.4 Market risk Market risk is described in Paragraph Ǿ 6.2.5.4. 4.3.5 Major risk ratio At 31 Ǿ December 2020, the AFD Group was in compliance with the major individual risk ratio set out by banking regulations, i.e. a maximum of 25% of risk-based consolidated capital.

4.3.6 Other operational risks 4.3.6.1 Risks related to the settlement process AFD has established a number of measures to tighten up the organisation and control of settlements: P procedures which describe and formalise the processing of settlements; P pre- and post-settlement checks; P training and awareness-raising initiatives, primarily on the risks of fraud, for staff involved in settlement processing and checks. In terms of anti-money laundering measures, AFD uses commercial software that provides an automated system to cross-check settlement records against a list of persons and entities that require extra vigilance. In addition, in order to meet national regulatory obligations in terms of paperless invoicing, AFD has upgraded its supplier payment process to a paperless process, via the use of the P in financing, guarantee and equity investment transactions, at all stages of the project cycle, as well as in implementation monitoring, recoveries, restructuring, pre-litigation and litigation; P in cross-cutting issues and innovative projects (Group risk prevention, international government agreements, relations with other funders, guarantee funds, partnerships, relations with subsidiaries and equity investments, new products, climate finance, digital, etc.); P in market transactions; P in institutional matters (bylaws, governance, relations with the State and supervisory bodies, etc.); P regarding banking and finance regulations; P in criminal matters, on all subjects where AFD Group or its directors may be held liable; P by providing consulting services for all AFD entities. To AFD’s knowledge, there are no governmental, legal or arbitration proceedings, whether suspended or pending, that could have or have had a material effect on the financial situation or the profitability of AFD and/or AFD Group over the last 12 Ǿ months. Chorus Pro platform. 4.3.6.2 Legal risks The Legal department is responsible for managing the Group’s legal risks. It covers all legal areas (with the exception of Human Resources, taxation and non-compliance risks). The Legal Department provides legal support:

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2020 UNIVERSAL REGISTRATION DOCUMENT