It is both our role and our responsibility to serve our customers by managing risks. We rely on a robust and efficient risk management unit that works across all our businesses and the markets and regions in which we operate, and also on a strong risk culture shared by all our staff.
The main objectives of our risk management policy are:
- serving our customers to the best of our ability and contributing to the development of our businesses, guaranteeing the Group’s sustainability by implementing an efficient system for risk analysis, measurement and monitoring;
- making risk control a differentiating element and a competitiveness factor recognised by all.
This policy is structured around major risk categories likely to affect our results:
- credit and counterparty risk, in the event that customers or other counterparties become unable to meet their financial commitments;
- market risk, such as significant fluctuations in the prices of securities (equities and bonds) or commodities;
- operational risk, related to failures in internal procedures, human error or external events;
- modelling risk, caused by an inaccurate estimation of the risks at the outset;
- structural risk, interest rate and exchange rate risk;
- cash flow and funding risk, in the event that the Group is unable to manage its cash flows effectively and fund the growth of its business;
- non-conformity risks, including legal and tax-related risks, and risks related to reputation and inappropriate conduct;
- country risk, in the event of changing political and economic conditions in the country of operation that negatively impact the Group's interests;
- strategic/business risk, in the event that the Group is unable to implement its strategy and carry out its business plan;
- capital investment risk, in the event of losses resulting from financial participations such as capital investment transactions;
- insurance-related risks, in addition to the management of risks related to assets-liabilities, these also include risks related to the setting of premiums, mortality risk and increased cost of claims;
- risk of residual value related to specialised financial services;
- risks related to climate change are considered to be compounding factors for the risks already faced by the Group.
Environment-related risks, for Societe Generale, they do not constitute an additional risk category. They represent a factor aggravating existing categories such as credit risk, market risk, operational risk, insurance risk and liquidity risk. Adaptation of the existing framework and governance processes will therefore continue in order to incorporate the impact of physical risks (financial risks relating to deterioration of the environment, especially climate change) and transition risks (financial losses relating to the process of adjusting to a low-carbon and more sustainable economy).
Risk management strategy
Implementing a high-performance and efficient risk management structure is a critical undertaking for Societe Generale, in all businesses, markets and regions in which it operates, as is maintaining a balance between strong awareness of risks and promoting innovation. The Group’s risk management, supervised at the highest level, is compliant with the regulations in force.
Specifically, the main objectives of the Group’s risk management strategy are:
- to contribute to the development of the Group’s businesses and profitability by defining the Group’s risk appetite in conjunction with the Finance Division and the business divisions;
- to contribute to the Group’s sustainability by establishing a risk management and monitoring system;
- to reconcile the independence of the risk management system from the business lines with close collaboration with the core businesses, which have primary responsibility for the transactions they initiate.
This can take the form of:
- clear principles for the governance, control and organisation of risks;
- determining and formally defining the Group’s risk appetite;
- effective risk management tools;
- an awareness of risks that is cultivated and established at each level of the company