We have placed our sustainable and profitable performance within a framework of robust risk, capital and liquidity management.
Our risk management is based on a ‘Three Lines of Defence' model, to shield us against risks that might threaten the achievement of our goals. Read more about the ‘Three Lines of Defence' model
The diagram shows the specific priorities we have set ourselves for the coming years with regard to risk management.
Our priority: putting the client at the centre of our risk management efforts.
This requires risk management to support the business side in the offering of appropriate, fair and sustainable products and services.
Our constant concern: protecting the client from unfair or inappropriate practices.
Client protection is also increasingly enshrined in regulations like the Markets in Financial Instruments Directive/Regulation (MiFID/MiFIR) and the Insurance Mediation Directive (IMD), and in various initiatives launched by the European Securities and Markets Authority (ESMA).
Our environment: increasing regulation
Increasing regulation in general is a key risk for us, as it is for the financial sector as a whole. A great deal of attention is paid in this regard to the foundations of the Banking Union: on the one hand, harmonised supervision by the European Central Bank of the most important euro-area banks (Single Supervisory Mechanism, SSM); and on the other, the Single Resolution Mechanism, applying to the same banks, based on the rules of the Bank Recovery and Resolution Directive (BRRD), which apply EU-wide. At national level, the new Banking Act in Belgium represents an important development in terms of prudential legislation and crisis management. For the insurance sector, meanwhile, Solvency II (SII) will impose new solvency rules with effect from 2016.
New risks linked to an ever changing operating context
We also view cyber risk, including hacking, as a key risk. Cyber-attacks are a constant threat in an increasingly digital world, with the potential to cause significant financial and reputational harm.
Business risk arises whenever changes in external factors threaten to undermine demand for our products and services, or their profitability. Significant causes of this type of risk include changes in the competitive environment or shifting client behaviour.
Our approach to sector specific risks
In addition to these general risks, we are inherently exposed as a bank-insurer to sector-specific risks such as credit risk, country risk, interest rate risk, foreign exchange risk, insurance underwriting risk and operational risk. A summary of the most important banking and insurance-specific risks can be found in the annual report, under Risk Management.
We monitor our performance
In addition to the comprehensive monitoring of various risk indicators, we monitor our solvency and liquidity performance via a number of Key Performance Indicators (KPIs), the most important of which are listed in the table below. Effective results per KPI can be found in the annual report.
|Common equity ratio||[common equity tier-1 capital] / [total weighted risks]. The calculation is fully loaded.||
≥ 10.4% in 2019, at group level (with additional pillar 2 guidance (P2G) of 1.0% CET1)
|Total capital ratio||[total regulatory capital] / [total risk-weighted assets]. The calculation is on a fully-loaded basis.||≥ 17% in 2017, at group level|
|Net stable funding ratio (NSFR)||[available amount of stable funding] / [required amount of stable funding].||≥ 105% from 2014, at group level|
|Liquidity coverage ratio (LCR)||[stock of high-quality liquid assets] / [total net cash outflows over the next 30 calendar days].||≥ 105% from 2014, at group level|