NATIXIS_PILLAR_III_2017_EN

GOVERNANCE AND RISK MANAGEMENT ORGANIZATION Risk management framework

THE BUSINESSES 2.1.4

The Human Resources Division is involved in the compensation policy and oversees its application. The central departments provide senior management with necessary information on the risk developments and the management of the bank. Natixis has established a control system comprising: first-level permanent controls performed by operational staff; a second-level permanent controls performed by three central a and independent divisions namely the Risk Division, the Compliance Department and the Accounting and Regulatory Review unit within the Accounting and Ratios Division.

Each Natixis entity is responsible for the first-level management of its risks within its scope. Level-one permanent controls are performed by operational staff on the transactions carried out according to internal procedures and in line with legislative and regulatory requirements. The controls can be performed by a functional division tasked with approving the relevant transactions.

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Risk management framework 2.2

Natixis’ risk management is based on independent control functions, each intervening on the risks falling within their scope of oversight. The risk management function, carried out by the Risk Division, is deeply embedded in the organization, has short decision-making processes, and teams across the businesses. It is structured as an independent and global matrix that covers all scopes and geographic regions. The risk management function recommends risk policies consistent with those of BPCE Group to Senior Management for approval, and makes proposals to the executive body concerning principles and rules in the following areas: risk acceptance procedures; a limit authorizations; a

Board of Directors, and to BPCE Group. A risk consolidation team generates an overview through the use of scorecards that report on the various risks (credit, market, liquidity, operational, etc.) and their management. To fulfill these responsibilities, the Risk Division uses an IT system tailored to the activities of Natixis’ main businesses and which applies the department’s modeling and quantification methods for each type of risk. The management and monitoring of Natixis’ structural balance sheet risks are placed under the authority of the Asset/Liability Management Committee (or “ALM Committee”). The ALM Committee’s monitoring scope includes the overall interest rate risk, liquidity risk and structural foreign exchange and leverage risk. The Compliance function oversees the non-compliance risk management system of Natixis S.A. and of its French and international branches and subsidiaries. It is also in charge of preventing fraud risk and of information systems security/business continuity. Its operating rules are governed by a charter that is signed off by the Senior Management Committee. The Compliance Function’s preventative actions - advice, raising awareness and training - are a key driver to improve Natixis’ management of non-compliance risk.

risk assessment; a risk supervision. a

It plays an essential role within the Committee structure, the highest-level Committee being Natixis’ Global Risk Committee, which meets once per quarter. In addition, it regularly reports on its work, submitting its analyses and findings to Natixis’ executive managers, to Natixis’

Risk culture 2.3

Natixis is defined by its strong risk culture at every level of its organization. The risk culture is central to the Risk Division’s guiding principles, as set out in the Risk Charter. It has four areas of focus: harmonizing good practices within the bank through the roll-out a of a body of risk policies, standards and procedures that cover all the bank’s major risks (credit, market and operational) and outline the bank’s strategic vision and risk appetite;

running global communication campaigns (posters, golden a rules, information on the Intranet and radio), and implementing a new e-learning module - now mandatory for all staff - on operational risks; setting up mandatory training on matters relating to model risk a management (model life cycles); promoting all-staff training on key subjects relating to a regulatory developments.

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NATIXIS Risk report Pillar III 2017

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