CA Indosuez (Switzerland) SA Annual Report 2022 64 a reversing entry. The receivables from the interest accumulated up to the expiry of the 90-day term (past-due unpaid interest and accumulated accrued interest) are written down under "Changes in value adjustments for default risk and losses from interest operations". 4.2.5. Conversion of foreign currency items The Bank uses a multi-currency accounting system and balance sheet items denominated in foreign currency are converted at the closing exchange rate. Interest on fixed-term transactions and commissions on fiduciary operations in foreign currency are recorded daily in the income statement and converted at the exchange rate prevailing on that day. All other income and expenses are recorded on the day they occur, using the rate prevailing at the time of the transaction. The exchange rates against the Swiss franc used for converting foreign currency items are as follows: 2022 2021 Currency Closing exchange rate Average exchange rate for the year Closing exchange rate Average exchange rate for the year EUR 0.9872 1.0019 1.0361 1.0790 USD 0.9250 0.9539 0.9167 0.9153 SGD 0.6897 0.6917 0.6772 0.6810 HKD 0.1185 0.1218 0.1175 0.1177 4.3. RISK MANAGEMENT 4.3.1. General risk policy The Bank is active in several business areas, which expose it primarily to credit risk, market risk, operational risk and legal risk. The monitoring, identification, assessment and management of these risks is a priority for the Bank. The Board of Directors is the body responsible for high-level risk monitoring. It establishes a suitable risk policy and, within this policy, defines the philosophy, the risk assessment approach and the monitoring method. It periodically reviews the adequacy of the risk management policy, makes regular changes and captures the risks arising from each of its areas of activity. The Audit and Risk Committee is tasked with the review and follow-up of the risk policy and risk management procedures and systems involving the different categories of risk to which the Bank is exposed. The Executive Committee oversees the enforcement of the risk policy approved by the Board of Directors and the introduction of suitable systems and procedures allowing the identification, measurement, assessment and management of the risks taken by the Bank, including via the ongoing presence of a Risks and Permanent Control Division. Independent of the Bank's revenue-generating operating activities, the Risk Management and Permanent Control Division monitors risk exposure and establishes the bases underpinning the Bank's risk management policy, its risk propensity and exposure limits subject to approval by the Board of Directors. Specifically, it arranges for and sets up adequate risk monitoring systems and ensures their adaptation, defines the databases and methods to measure risks and ensures that the systems are appropriately used. It ensures an adequate level of information through internal reports. 4.3.2. Credit risk Credit risk represents the losses incurred by the Bank in the event of default by a client or a counterparty. Customer loans Lending decisions are covered in advance by risk strategy guidelines. Loans are granted under a system of delegation of authority and are subject to a rating system. The rating is reviewed once a year. A Credit Committee examines loan applications, granting authorisations on the basis of the aforementioned delegation and policy. This policy encompasses the commitments of the Bank's clients and correspondents that result from lending activities, issuance of guarantees, and trading in currencies, derivatives and securities. Decision-making and the monitoring of individual risks are supplemented by a portfolio risk monitoring mechanism that captures the counterparty risk of the entire portfolio and highlights particular risk characteristics in the overall portfolio. Portfolio reviews are organised each year in each major area in order to ensure that the actual portfolio is in line with existing risk strategies. Risks are regularly monitored by the Risk Management and Permanent Control Division according to stringent procedures. The Executive Committee and the Board of Directors are kept informed on a regular basis. Counterparty risks in interbank business Crédit Agricole Group in Paris manages exposure to other banking institutions and sets counterparty limits on each affiliate based on the strategy and risk management policy of the Group. As it stands, the Bank has not been delegated by Crédit Agricole Corporate and Investment Bank ("CA CIB") to take risks involving third party financial institutions, and each risk taken is subject to ratification by CA CIB. All credit facilities must be approved by the Bank's Committee on Loans to Financial Institutions ("CCIF") and by CA CIB. Each arrangement is subject to annual review. The Risk Management and Permanent Control Division monitors the compliance of credit facilities. In the event of an anomaly, it notifies the business line concerned, queries it on the nature of the anomaly and tracks progress on its resolution.
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