GROUPAMA / 2019 Universal Registration Document

5 GROUP RISK FACTORS

Organisation of risk management within the Group

5.2

ORGANISATION OF RISK MANAGEMENT

WITHIN THE GROUP

In order to better manage all the risks to which it is exposed, the Group has put in place a set of measures and risk monitoring processes managedwithin a global framework. The implementation of the risk management system within the Group isensured by: the definition of standards and a structuring framework for ● analysis and control of risks; support from the entities in the implementation of this risk ● management system; downstream checks of compliance with the Group standards ● and the effectiveness of the risk management system implemented within theentities. At the Group level, risks related to the insurancebusiness lines are monitored especially by the Groupama AssurancesMutuelles and GroupamaGan Vie BusinessDepartmentsspecialisingin the areas in question and by the Reinsurance Department. The Finance Departmentis responsiblefor managing the risks related to assets and Asset/LiabilityManagement.Operationalrisks are monitoredby the BusinessDepartments,SupportDepartments,or subsidiariesof Groupama Assurances Mutuelles specialising in the area in question. Risks are identified according to the Group classificationsdefined by risk area – operational, life insurance, non-life insurance, and financial – common to all Group entities and incorporating the Solvency II risk classification.Each major risk (Group and entity) is assigned a risk “owner” responsible for monitoring and controlling the risk in accordance with the standards defined by the Group. The risk ownersestablishrisk control plans, which are implemented within theGroup’s entities. The general principles, the objectives, and the organisation of internal control are defined in the Group’s internal control policy. An internal audit policy, a componentof internal control, supplements the provisions of the internal control policy and specifies its own operating rules and its areas of involvement. A general risk managementpolicy and policies dedicatedto covering all the risks to which the Group is exposed as well as a compliance policy, defining the overall framework for implementingand operating the compliance system within the Group, complete the system. All these policies are approved by the Groupama Assurances MutuellesBoardof Directors. The Group risk management policy is the basis for risk managementat both the Group level and the entity level. It defines all the structuringprinciples of the risk managementsystem within Groupama in terms of risk identification, measurement, and management methods and in organisational terms. The Group’sentities formalisetheir risk managementpolicy and the various risk policies in line with the Group’s policies and depending on their risk profile, their organisation, and their country of operation. The service (or resource), distribution, and financial subsidiaries implement a risk management system in accordance with the rules applicable to their activities and consistent with the frameworkestablishedby the Group.

Since 2014, the risk management system has also relied on the ORSA (Own Risk and Solvency Assessment) process, which is reflected in the drafting of an annual report. This exercise, which aims to assess risks and solvency,is carriedout at the level of each Group entity and at the consolidated level, and each report is validated by the Board of Directors of the entity in question and communicated tothe regulator. Several bodies are responsible for governance of the risk monitoring system at the Group level: the Group Risk Committee: composed of the members of the ● Group Executive Committee and Manager of the Risk Management key function; its tasks are to approve the risk managementpolicy, particularlyby setting the limits of risks and approving the measures to be used to manage the risks and supervising themanagement ofmajor risks for the Group; the Risk Committees by risk family (insurance, financial, ● operational, and compliance) organised by the Group Risk Management,OperationalRisk Management/PermanentControl, and ComplianceDepartmentsand made up of major risk owners and accordingto the affectedareas of the representativesof the Groupama Assurances Mutuelles Business and Support Departments(Group Actuarial Department, Group Steering and Results Department, Investments, etc.), French Subsidiaries/InternationalSubsidiaries Department, and Asset Management subsidiaries; the Capital Management Committee consisting of the Deputy ● CEO, the Chief Financial Officer, the Director of Risk Management,Control, and Compliance,the InvestmentDirector, the Finance Director, the Solvency II Director, and the representative of the International Department in charge of monitoring internationalsubsidiaries. Similar systems are in place atthe entity level. In addition, a committee for the implementation and sharing of objectives, decisions, and best practices between the Group’s entities has been set up. This ARCC Operation Committee (Audit, Risk, and Control operational implementation committee) is coordinated by the Group Risk Management, Control, and ComplianceDepartmentand the Group General Audit Department with the participation of the Group Legal Department. It brings together the regional mutuals, the insurancesubsidiariesin France, and GroupamaSupports& Services(G2S). The Group Risk Management, Permanent, and Compliance functionsare responsiblefor ensuringthat all Group entities comply with the requirements of Executive Management in terms of the internal control, compliance,and risk managementsystem, as well as thoseof Solvency II, Pillar 2. The Group Risk ManagementDepartment is especially involved in areas related to financial risks, insurance risks, and risks related to the Group’s solvency, the Group Operational Risk Management and Permanent Control Department is especially involved in the scope related to operationalrisk management,and the key function of ComplianceVerificationof GroupamaAssurancesMutuelles,the Group compliance officer, is involved in the areas related to

104

Universal Registration Document 2019 - GROUPAMA ASSURANCES MUTUELLES