BPCE - 2019 RISK REPORT Pillar III

RISK MANAGEMENT SYSTEM

RISK APPETITE

Emerging risks

Groupe BPCE places great importance on anticipating and managing emerging risks in today’s constantly changing environment. The international geopolitical environment is an ongoing source of concern, with various geopolitical tensions continuing to weigh on general economic conditions and fueling uncertainties. Low-to-negative interest rates have had a continuous adverse impact on the profitability of commercial banking activities, due to the predominance of fixed-rate home loans and life insurance activities. As the economy and financial services have grown increasingly digitized, banks have had to remain constantly vigilant against cyber threats. The sophistication of cyber attacks and potential vulnerability of their IT systems are both major risks for Groupe

BPCE, in conjunction with the expectations of the regulatory authority. Groupe BPCE is acutely aware of the changes in the regulatory environment, particularly in terms of new standards on provisions and guidelines on non-performing loans, and particularly the new definition of default and the finalization of Basel III. Climate change and social responsibility are increasingly covered in the risk management policy. Climate risk management is also addressed in the CRR2-CRD5 guidelines. Operational risks associated with pandemics, with the regular appearance of new viruses worldwide (and especially the current coronavirus, COVID-19), are closely monitored and crisis management systems are applied when necessary.

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RISK REPORT PILLAR III 2019 | GROUPE BPCE