GROUPAMA / 2019 Universal Registration Document

7 FINANCIAL STATEMENTS Consolidated financial statements and notes

Risk factors and sensitivity analyses Note 49

As a multi-line insurer, Groupama is subject to various types of insurance risks with variable time horizons. The Group is also exposed to market risks because of its financial investment activities, particularly credit risks and the risks related to interest rates, equity markets,foreign exchangeand property.Liquidity and reinsurer insolvency risks are also specifically monitored by the Group. In addition, the Group is subject to operational,regulatory, legal and tax risksas are allcompanies in other business ectors. Organisation of risk management within the Group The implementationof a consistentrisk managementsystemwithin the Group isensuredby: 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. 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, 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. 1

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 2 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. 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. Operationally,the internal control systemof the entities and the EIG Groupama Supports & Services is organised around three complementary systems: risk management and permanent control/compliance of each ● entity; internal or operational auditing of each entity; ● Group risk management and permanent control/complianceas ● well as the Group General Audit Department, reporting to the Executive Management of Groupama Assurances Mutuelles, which direct and coordinate the Auditing and Risk & Control functions within the Group. 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 Investment Directors, the Finance Director, the Solvency 2 Director,and the representative of the international department in charge of monitoring internationalsubsidiaries.

239

Universal Registration Document 2019 - GROUPAMA ASSURANCES MUTUELLES