RISK REPORT Summary of risks
Summary of risks 3.2
Types of risk
Given the diversity and developmentsin Groupe BPCE’s activities,risk managementis centered onthe followingmain categories: credit and counterparty risk (including country risk): risk of loss ● resulting from the inability of the Group’s customers, issuers or other counterparties to meet their financial commitments. Credit risk includes counterparty risk related to market transactions (replacementrisk) and securitizationactivities.Moreover,credit risk may be exacerbated by concentration risk, resulting from high exposureto a given risk, to one or more counterparties,or to one or more groups of similarcounterparties. Country risk arises when an exposure is liable to be adversely affected by changes in the political, economic,social and financial conditions of thecountryof exposure; market risks: risk of loss in value of financial instrumentsresulting ● from changes in market parameters, from the volatility of these parameters or from the correlations between these parameters. These parameters are exchange rates, interest rates and prices of securities (equities, bonds), commodities, derivatives or any other assets, suchas real estate assets; liquidityrisk: risk that the Group cannotmeet its cash requirements ● or collateral requirementswhen they fall due and at a reasonable cost; structural interest rate and foreign exchange risks: risk of loss in ● interest income or in the value of a fixed-ratestructuralpositionin the event of changes in interest rates and exchange rates. Structural interest rate and foreign exchange risks are associated with commercial activities and proprietarytransactions;
legal risks: risk of legal, administrativeor disciplinary sanction or ● material financial loss arising from a failure to comply with the provisionsgoverning theGroup’sactivity; non-compliancerisk: risk of a legal, administrativeor disciplinary ● penalty, material financial loss or reputational risk arising from a failure to comply with the provisions specific to banking and financial activities ( whether these are stipulated by directly applicable national or European laws or regulations), with professionalor ethical standards,or instructionsfrom the executive body, notably issued in accordance with the policies of the supervisory body; operational risk: risk of loss resulting from inadequacies or ● malfunctions attributable to procedures, employees and internal systems, or external events, includingevents with a low probability of occurrence, but with a risk of high loss; risk related to insurance activities: the Group is also exposed to a ● series of risks inherent to this business through its insurance subsidiaries or equity interests. In addition to asset-liability risk management (interest rate, valuation, counterparty and foreign exchange risks), these risks include pricing risk in respect of mortality risk premiums and structural risks related to life and non-life insurance activities, including pandemics, accidents and disasters (earthquakes, hurricanes, industrial accidents, terrorist acts or military conflicts); climate risk: the vulnerability of banking activities to climate ● change, where a distinction can be made between physical risk directly relating to climate change and transition risk associated with effortsto combat climate change.
Registration document 2017
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