NATIXIS - Universal registration document and financial report 2019

RISK FACTORS, RISK MANAGEMENT AND PILLAR III Risk management

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 every level of the Company, the business line Operational Risk Committees review their serious incidents and decide on the application of corrective actions, determine the deadlines and associated deliverables, and monitor the progress of these actions. 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. Overall trend of reported incidents In 2019, nearly 2,950 incidents that occurred in the year (representing 8,250 single incidents) were entered into the recording tool by the Natixis business lines. The application of reporting threshold has helped to reduce the number of declarations made since 2016, particularly in the Payments, Insurance, and Asset & Wealth Management business lines and the cross-business functions.

Breakdown of reported incidents by business and date

2, 500

3

2,312

2,114

2,000

1,673

1,500

1,000

534 542

511

2017 2018 2019

421

440 444 363

500

390 371

350

262

252

238

77 66

0

Asset & Wealth Management

Payments

Functional Departments

Corporate & Investment Banking

Insurance

Corporate center

Breakdown of reported incidents by net amount by date and Basel category

100 %

Ǿ 2017 2018 Ǿ 2019

86.08 %

80 %

70.14 %

68.47 %

60 %

40 %

21.80 %

18.49 %

20 %

6.05 %

6.58 %

5.42 %

5.12 %

4.67 %

1.75 %

1.77 %

1.58 %

1.02 %

0.13 % 0.05 % 0.03 %

0.21 %

0.14 %

0.50 %

0 %

0 %

External fraud

Execution, delivery and procedures

Business interruption and Information System deficiencies

Employment and safety practices

Commercial customers, products and practices

Internal fraud

Damage to property plant and equipment

Risk profile 3.2.6.4 In 2019, a risk analysis was performed on all of Natixis’ business lines and support and control functions. Verifying consistency with the results from General Inspections and the results of permanent controls highlighted the most important risks for each scope and helped prioritize corrective measures to be implemented in order to improve the risk management mechanism. The Corporate & Investment Banking business lines represent the majority of risks under review owing to the extensive nature of the division’s activities and operations in both France and internationally.

Measures to reduce risk 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. 72% of the almost 360 corrective actions initiated in 2019 were implemented by the business lines in charge and are monitored by the business line and central Operational Risk Committees. These actions, defined to reduce and resolve operational risk, are ranked according to three priority levels depending on the risks incurred. An alert system has been set up to prompt assessment by the Natixis Operational Risks Committee of any delays in implementing first-level corrective actions.

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NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2019