NATIXIS - Universal registration document and financial report 2019

3 RISK FACTORS, RISK MANAGEMENT AND PILLAR III Risk management

a pillar focused on training with, in addition to mandatory V e-learning modules, efforts to promote the training of all employees in specific subjects, notably relating to regulatory changes, onboarding sessions for new colleagues and a “discovery” program to give insight into the business lines and control functions, a “career path” pillar incorporating “risk culture” as a recruitment V criterion, the introduction of cross-over business/risk pathways and the inclusion of “risk culture” as an employee appraisal criterion. Initiatives aimed at inculcating the risk culture are run throughout the year. In particular, 2019 saw the first edition of our risk culture week. The Code of Conduct adopted by Natixis in December 2017 is another effective means of inculcating the risk culture, as it defines the rules of conduct applicable to all employees, and encourages greater involvement and accountability. Four guiding principles serve as the building blocks of Natixis’ DNA and are adapted to each profession and function. The rules fall into the following themes: protecting Natixis’ and Groupe BPCE’s assets and reputation. V An e-learning module was made mandatory for all employees and was rolled out after adapting the performance indicators and dashboards to each entity. An analysis was then presented at conduct Committee Meetings held for each entity. They are four-party committees that bring together the business line, Human Resources, Compliance and the Risk Supervision Division. Lastly, Natixis’ compensation policy is structured in a way that encourages the long-term commitment of the company’s employees while ensuring appropriate risk management. Risk appetite 3.2.2.4 (Data certified by the Statutory Auditors in accordance with IFRS 7) Natixis’ risk appetite is defined as the nature and the degree of risk that the bank is willing to take within the bounds of its business model and strategy. It is consistent with Natixis’ strategic plan, budget process and business activities, and falls within Groupe BPCE’s general framework on risk appetite which is based on two items: the Risk Appetite Statement (RAS), which sets out, in 1. qualitative and quantitative terms, the risks that the Bank is prepared to take; the Risk Appetite Framework (RAF), which describes the 2. interface between the organization’s key processes and the implementation of the governance that puts the RAS into action. Risk appetite is reviewed annually by Senior Management and approved by the Board of Directors after consultation by the Risk Committee. being client-centric; V behaving ethically; V acting responsibly towards society; V

The Risk Appetite Statement Natixis’ risk appetite principles result from the selection and control of the types of risks that the Bank is prepared to take in pursuit of its business model. They ensure consistency between Natixis’ overarching strategic guidelines and its capacity to manage risks. The business model developed by Natixis is based on its recognized areas of expertise (Corporate Financing, Capital Market activities, Asset & Wealth Management, Insurance and Payments), in response to the needs of its clients and those of Groupe BPCE. The Bank seeks sustainable and consistent profitability in balance with its consumption of scarce resources (capital, liquidity, balance sheet). It declines any engagement with activities that it does not master. Activities with high risk/profitability ratios are subject to strict selection and oversight. Market risk management in particular has a highly selective investment approach, coupled with limited tolerance for extreme risk, and very close monitoring. Natixis incurs risks that are intrinsic to its Corporate & Investment Banking, Asset & Wealth Management, Insurance and Payments business activities: credit risk generated by Corporate & Investment Banking is V managed under specific risk policies adapted by business and subsidiary, concentration limits defined by counterparty, sector and country, and through extensive portfolio monitoring. Natixis ensures the selective management of issuance commitments through independent analyses and various Credit Committees; leverage and liquidity risk are included in Groupe BPCE’s risk V framework. Since BPCE provides a liquidity and capital adequacy guarantee, Natixis applies BPCE’s risk policies to its own organization. These two risks require setting specific objectives for managing scarce resources using a dedicated framework and management objectives. Natixis oversees the strategy to diversify its sources of financing as well as those of Groupe BPCE, and manages its solvency ratio to cope with stress situations; within CIB, Natixis’ market activities — which aim to meet the V needs of its clients and exclude all forms of proprietary trading — incur market risk. This risk is managed according to a body of risk policies and specific qualitative and quantitative indicators; operational risk is intrinsic to all the bank’s business lines and V functions and is managed using a shared data collection tool. The system, which has been rolled out across the business lines and geographic regions, is used to map risks and implement corrective and preventive action plans accordingly; model risk primarily affects CIB activities related to valuation, V risk and capital models; Natixis is committed to strictly observing the laws, regulations V and norms governing its activities, in France and internationally, in the realm of financial security (anti-money laundering, terrorism, corruption and fraud), compliance and client protection; Natixis’ most important asset is its reputation and its relationship V with its clients. Clients’ interests are therefore put first and the bank — irrespective of the business activity, entity or geographic region — is dedicated to operating at the highest level of ethical standards, and in line with the best transaction execution and security. Together with Groupe BPCE, Natixis closely monitors its reputation risk using indicators that combine an ex-ante/ex-post approach.

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NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2019

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