NATIXIS_PILLAR_III_2017_EN

10 OPERATIONAL RISKS Operational risk monitoring

IDENTIFYING LOSSES 10.3.2 AND INCIDENTS

Bank, the business line Operational Risk Committees review their serious incidents, decide on the corrective actions to be implemented, propose the relevant deadlines and targets, and monitor their progress. The entities and business lines can decide to apply these measures to their own threshold, which is lower than that of Natixis and consistent with its activity and level of risk. Most operational risk incidents occur frequently and have a low impact per incident.

Listing and analyzing incidents 10.3.2.1 Incidents are listed as they occur. In 2017, an optional reporting threshold of, respectively, €5,000 for the Corporate & Investment Banking and Asset Management business lines and €1,500 for Specialized Financial Services, Insurance and Private Banking was introduced in line with BPCE standards. A single definition of “serious incident” is used, in compliance with Groupe BPCE standards (€300,000 gross). All serious incidents (above the defined threshold or deemed serious by the business line and the Operational Risk Department) are reported immediately to the business line’s management and to Natixis’ Chief Risk Officer. Following an investigation involving all relevant parties, the operational risk manager of the business line compiles a standardized full report, including a factual description of the event, the analysis of the initial cause, the description of the impact and the proposed corrective actions. At all levels of the

Overall trend of reported 10.3.2.2 incidents

In 2017 over 5,300 reported incidents (a single incident potentially comprising several individual incidents) were entered into the collection tool by the business lines. The Specialized Financial Services division makes up close to half of the number of reported incidents, but accounts for only 11% of impacts. However, Corporate & Investment Banking activities in France and abroad account for more than 80% of the amount of losses and provisions reported in 2017, with these activities representing only 10% of the listing in number.

TABLE 61 (OR1): CHANGE IN OPERATIONAL LOSSES (1) R

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

(in millions of euros)

Total loss amount

13

38 476

13

12

34

40

73

91

53

72

Total loss amount exceeding €1 million

3

22 460

3

4

23

22

57

74

30

52

TABLE 62 (OR3): CHANGE IN OPERATIONAL LOSSES DECLARED IN 2017 - COREP APPROACH (2) R

December 2015

December 2016

December 2017

Total number of losses exceeding €1 million Total loss amount exceeding €1 million

18

17

12

115

123 103

117

Total amount of the five biggest losses in millions of euros

74

83

Measures to reduce risk 10.3.2.3

nearly 60% have been completed) and monitored by the business line and central Operational Risk Committees. They are also assigned one of three levels of priority reflecting the risks incurred and whether or not they are associated with a serious incident. An alert system has been set up to prompt assessment by the Natixis Operational Risks Committee of any delays in

Natixis has implemented measures in every business line and support function to monitor the corrective actions to reduce the Bank’s exposure to operational risks. These corrective actions are actively managed by the designated implementation managers (of more than 500 corrective actions set up in 2017,

implementing first-level corrective actions.

Including losses recorded and provisions >=20k€ net of recoveries except for insurance and frontier credit risk (1) Gross impact of incidents reported or modified in 2017 (status validated or closed). (2)

126

NATIXIS Risk report Pillar III 2017