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Risk governance

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KBC’s risk governance model is characterised primarily by:

  • the Board of Directors, assisted by the Risk and Compliance (RRC) Committee, which sets the risk appetite each year, monitors risks and proposes action, where necessary.
  • an integrated architecture centred around the Executive Committee that links risk appetite, strategy and performance goal setting.
  • the Risk Management Committee and activity-based risk committees mandated by the Group Executive Committee.
  • risk-aware business people, who act as the first line of defence for conducting sound risk management in the group.
  • a single, independent risk function that comprises the Group Chief Risk Officer (CRO), local CROs, local risk functions and the group risk function. The risk function (together with the compliance function) acts as the second line of defence, while Internal Audit is the third line.

Risk management information

The business of bancassurance is exposed to a number of typical risks, such as credit risk, market risk , liquidity risk , technical insurance risk, operational risk and other non-financial risks. Controlling all these risks is one of the most crucial tasks of management.


More information on risk management can be found in:

 

Most material sector-specific risks

Sector-specific risks How are we addressing them? Reference in the 2020 annual report

Credit risk

  • Existence of a robust management framework
  • Recording impairment charges, taking risk-mitigating measures, optimising the overall credit risk profile, reporting, stress testing, etc.
  • Limit systems to manage concentration risk in the loan portfolio, etc.
p. 88-98
Market risk in non-trading activities
  • Existence of a robust management framework
  • Basis Point Value (BPV), sensitivity of net interest income, sensitivity per risk type, stress tests, limit tracking for crucial indicators, etc.
p. 99-107
Non-financial risk (operational risk, compliance risk, reputational risk, business risk, strategic risk)
  • Existence of a robust management framework
  • Group key controls, risk scans, Key Risk Indicators (KRIs), etc.
  • Risk scans and monitoring of risk signals
  • Strict acceptance policy, stress tests, monitoring, etc.

 

p. 108-113
Market risk in trading activities
  • Existence of a robust management framework
  • Historical VaR method, BPV and basis risk limits, ‘greeks’ and scenario limits for products with options, stress tests, etc.
p. 114-116

Liquidity risk

  • Existence of a robust management framework
  • Drawing up and testing emergency plans for managing a liquidity crisis
  • Liquidity stress tests, management of funding structure, etc
p. 117-119
Technical insurance risks
  • Existence of a robust management framework
  • Underwriting, pricing, claims reserving, reinsurance and claims handling policies, etc.
p. 120-122
Climate-related and other ESG risks
  • Gradual integration in existing management frameworks
  • Ongoing initiatives within the Sustainable Finance programme
  • Implementation of risk-mitigating measures, including policies on lending and investment portfolio
  • Estimation of short and long-term risks based on scenario and sensitivity analyses, etc.
p. 123-126

Last update: 01-04-2020

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