BPCE_PILLAR_III_2017

9 LIQUIDITY, INTEREST RATE AND FOREIGN EXCHANGE RISKS Governance and structure

Governance and structure 9.1

Like all credit institutions, Groupe BPCE is exposed to structural liquidity, interest rate and foreign exchange risks. These risks are closely monitored by the Group and its institutions to secure immediate and future income, ensure that balance sheets are balanced and promote the Group’s development. Groupe BPCE’s Audit Committeeand SupervisoryBoard are consulted on general ALM policy and are informed of major decisions taken regarding liquidity, interest rate and foreign exchange risk management.The implementationof the chosenpolicy is entrustedto the Group Assetand Liability Management Committee. Each year, Groupe BPCE’s SupervisoryBoard validates the main lines of the ALM policy, i.e. the principlesof market risk measurementsand the degree of risk accepted.It also reviews the risk limit system each year. Each quarter, BPCE Group’s Audit Committee is informed of the Group’s position through management reports containing the main risk indicators. The Group Asset and LiabilityManagementCommittee,chairedby the President of BPCE’s Management Board, ensures the operational implementation of the defined policy, the management of the structure and the operation of the risk management system. This committee notably sets the rules and limits governing the management of the three major risk categories applicable at the

consolidated level and to each institution, as well as the main guidelines in terms of funding policy, allocation of liquidity to the business lines and management of risk indicators. It regularly monitors the risk indicators and changes to the main structural balance sheet aggregatesof the Group and its main institutions. The structural liquidity, interest rate and foreign exchange risk managementpolicy is also jointly implementedby the asset/liability management function (oversight of funding plan implementation, managementof liquidity reserves, cash management,calculationand monitoring of the various risk indicators) and the Risk Management function (validation of the control framework, validation of models and agreements, controls of compliance with rules and limits). The Group Finance division and the Group Risk Managementdivision are responsible for adapting this frameworkto their respective functions. The adaptation of the operational management framework within each institutionis subject to validationby the Board of Directors,the Steering Board and/or the Supervisory Board. Dedicated operational committeeswithin each institution oversee the implementationof the funding strategy,asset and liabilitymanagementand managementof liquidity, interest rate and foreign exchange risks for the institution, in line with rules and limits set at the Group level. The Banque Populaire and Caisse d’Epargne network implement the risk managementsystemusing asharedasset/liabilitymanagementtool.

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Risk Report Pillar III 2017