CFM INDOSUEZ Wealth Management - 2019 annual report

3 . 1 c r e d i t r i s k The monitoring of credit and counterparty risks at CFM Indosuez Wealth Management is carried out by the Risk and Permanent Control department. Counterparty risk is focused on the client lending business and is part of Wealth Management business line’s risk management strategy, approved by the governing bodies of CA CIB and CA SA. CFM Indosuez Wealth Management is exposed to counterparty risk with respect to natural persons, legal entities, wealth structures whose beneficial owners are natural persons or commercial companies related to an entrepreneur client whose activity or decision-making centre is based in Monaco. Any exception to this scope of counterparties is subject to prior approval by the Indosuez Group Executive Management and its Risk department. Changes in book values and value adjustments for losses over the period Value adjustments for losses are impairment losses on assets and provisions on off-balance sheet commitments recognised in net income (cost of risk) in respect of credit risk. The various impairment stages (Performing assets - Bucket 1 and Bucket 2 and Impaired assets - Bucket 3) are explained in Note 1.2 “Accounting principles and methods”, in the chapter on “Financial instruments - Provisioning for credit risk”. The following tables present a reconciliation of the opening and closing balances of the value adjustments for losses recognised in Cost of risk and the associated book values, by accounting category and type of instrument. 72 CFM Indosuez Wealth Management