Identifying risks to better anticipate them

Identifying risks to better anticipate them

Risk management is at the heart of our model. It is based on two missions: identifying risks of all kinds, tangible or emerging, and protecting against them through a continuously improving internal control system.

Thanks to its proven effective risk control in all its activities and its solid culture of compliance, the Group has been able to support its customers and finance their investments, despite uncertainties related to the persisting health crisis.

The identification and anticipation of the risks to which our Group may be exposed is central to our framework, in order to protect our activities. Particular attention is paid to major and emerging risks.

Major risks include those that are likely to arise in the short term and may have a material impact on the Group’s financial results, reputation or sustainability. They may be related to the macro‑economic environments in which we operate, such as increased debt; the regionalisation of trade, due in particular to the possible relocation of production lines to developed countries; or changes in laws and regulations applicable to financial institutions. To be added to this landscape are risks related to political instability in some countries or the increase of cyberattacks and the acceleration of technological change.

Emerging risks are new and/or evolving risks. While their impact may be significant in the future, they are currently difficult to quantify and precisely assess. Among them are technological innovations, regulatory changes, health threats, climate change as well as demographic and societal changes.

A continuously improved internal control system

To keep growing while maintaining the trust of our customers and partners, our internal control system must be effective and efficient at all times. Based on six transversal functions ‑ LEGAL, Compliance, RISK, Tax, Finance, and Inspection Générale ‑ the system leverages on rigorous policies and procedures, while also being complemented by an ever more disciplined compliance culture. Our objectives? Further improve our operational model to fight money laundering, terrorism financing and corruption; increase compliance with international financial sanctions; and bolster online training programmes for all our employees. Combined with our strategy of diversifying our loan portfolios, this risk management policy contributes directly to BNP Paribas’ solidity.

34 bps*

at a low level and down by 32 points compared to 2020.

* Cost of risk reported on outstanding client loans at the beginning of the year (in basis points).

A risk control system, present at all levels of the Company

1st line of defence

Operational entities: business lines and functions

2nd line of defence

Functions: LEGAL, Compliance, RISK, Tax and Finance

3rd line of defence

Inspection Générale