BPCE - 2018 Risk report / Pillar III

2 GENERAL STRUCTURE OF GROUPE BPCE’S INTERNAL CONTROL SYSTEM Participants in the control system

The Group controlsystemrelies on three levels of controls,in accordancewith bankingregulationsand soundmanagementpractices–

two levels

of permanent controls and one level of periodic control – provisionsapproved byBPCE’sManagement Board.

as well as the establishmentof consolidatedcontrol processes in accordancewith

Participants in the control system 2.1

Permanent Control by linemanagement (Level 1) Level 1 permanent control is the first link in internal control and is primarily performedby operationalor support departmentsunder the

implementing recommendations drawn up by Level ● functions onthe Level1 controlsystem; reporting to and alerting Level 2 control functions. ● Depending on the situation and activit(ies) in question, Level 1 controls are performed, jointly if applicable, by a special-purpose Middle Office-type control unit or accounting control entity, by the operationalstaff themselves, or by line managers. Level 1 controls are formally reported to the relevant Permanent Control divisions or functions. 2 control

supervision of their linemanagement. These departmentsare responsible for:

implementingformalized,documented and reportable self-checks; ● documentingand verifying compliancewith transactionprocessing ● procedures, detailing the responsibility of those involved and the types of checkscarried out; verifying the compliance of transactions; ●

Permanent Control by dedicated entities(Level 2)

Level 2 permanent controls, within the meaning of Article 13 of MinisterialOrder A-2014-11-03on internalcontrol,are performedby entities dedicated exclusively to this duty within the Group’s Risk, Compliance and Permanent Control division.

Other central functions also contribute to the permanent control system, such as the Legal Affairs division and the Group Human Resourcesdivisionfor certainissues affectingthe paypolicy.

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Risk Report Pillar III 2018