Risk governance


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? Information in the 2019 annual report

Credit risk

The potential negative deviation from the expected value of a financial instrument caused by default on the part of a party to a contract, due to the inability or unwillingness of that party to pay or perform, or due to particular situations or measures on the part of political or monetary authorities in a particular country. 

  • Existence of a robust management framework
  • Recording impairment charges, taking risk-mitigating measures, optimising the overall credit risk profile,stress testing etc.
  • Limit systems to manage concentration risk in the loan portfolio.
p. 95-105

Market risk in non-trading activities

Structural market risks, such as interest risk, equity risk, real estate risk, spread risk, currency risk and inflation risk. Structural risks are risks inherent to the commercial activity or long-term positions.

  • 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. 106-115

Liquidity risk

The risk that KBC will be unable to meet its payment obligations as they come due, without incurring higher-than-anticipated costs.

  • 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. 129-132

Market risk in trading activities

The potential negative deviation from the expected value of a financial instrument caused by fluctuations in the level or volatility of market prices, such as in interest rates, exchange rates, and share or commodity prices.

  • 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. 125-128

Technical insurance risks

Risks stemming from uncertainty as to how often insured events will occur and how extensive they will be.

  • Existence of a robust management framework
  • Underwriting, pricing, claims reserving, reinsurance and claims handling policies, etc.
p. 133-135

Non-financial risks

Operational risk is the risk of loss resulting from inadequate or failed internal processes and systems, human error or sudden external events, whether man-made or natural. Compliance risk is the risk of losses or sanctions due to failure to comply with laws and regulations promoting integrity, and with internal policies and codes of conduct reflecting the institution’s own values. It includes conduct risk, i.e. the current or prospective risk of losses arising from inappropriate supply of financial services, including cases of wilful or negligent misconduct. Climate risk is the risk associated with the transition to a low-carbon economy and the risk from climate-related physical events that impact our business.Other non-financial risks include reputational risk, business risk and strategic risks.

  • Existence of a robust management framework
  • Group key controls, risk scans, Key Risk Indicators, etc.
  • Risk scans and developing new methodologies together with external parties
  • Strict acceptance policy,stress tests, monitoring, etc
p. 116-124

Last update: 01-04-2020

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