CFM INDOSUEZ Wealth Management - 2020 Annual Report

37 CREDIT RISK: Provisions set aside to cover credit risk are limited as exposures are well covered by the nature of investments and the type and coverage ratio of guarantees, which allow rapid recovery by enforcing rights to collateral as required. Provisions in the bank’s separate financial statements totalled €8.6million at end 2020, compared with €9.17 million a year earlier. Non-performing and disputed exposures continued to decline at €12.7million comparedwith€27.5million in 2019, representing less than 1% of loans recorded in the balance sheet, which decreased from €3.43 billion to €3.33 billion at 31/12/2020. Deployment of the special Monegasque Credit Guarantee Fund in the context of Covid-19. The Principality of Monaco took exceptional emergency economic measures to support merchants, artisans and small businesses in Monaco, to help them face the unprecedented situation (the health andeconomic crisis linked to Covid-19). The CFM Indosuez “New Activities and New Products” Committee held on 04/05/2020 validated and presented the principles for the use of this fund by corporate clients of CFM Indosuez. To date, there have been 23 loans 100% guaranteed by the Monegasque Credit Guarantee Fund, for a total of €7.7 million. Details of credit risk exposure are provided in Note 3.1 to the consolidated financial statements. MARKET RISK: Details of market risk exposure are provided in Note 3.2 to the consolidated financial statements. COUNTERPARTY RISK: As most of our exposures are backed by collateral, capital requirements are limited and the risk-weighted assets allocated to credit risk are lower than the risk appetite set for the bank’s activity. LIQUIDITY AND FUNDING RISK: Details of liquidity and funding risk exposure are provided in Note 3.3 to the consolidated financial statements. FAIR VALUE HEDGING OF INTEREST RATES: The amounts of cash flow hedges and fair value hedges on interest rate and foreign exchange positions are provided inNote 3.4 to the consolidated financial statements. OPERATIONAL RISKS: IndosuezWealth Management Group has produced a group-wide operational risk map, consisting of a list of activities and processes performed by each entity, using a common structure. It applies to the internal control scope of CFM Indosuez Wealth Management and its subsidiaries. At 31/12/2020, each area in the operational risk map was reviewed and validated by its business line manager as part of the annual process of review and backtesting. The cross-divisional mapping of compliance, internal or external fraud and legal risks is also validated annually by Compliance and the Legal department. Amapping of the risks of corruption and influence peddling for CFM Indosuez and its subsidiaries, CFM Indosuez Gestion andCFM Indosuez Conseil en Investissement, carried out with the assistance of Deloitte at end 2019, was presented and validated at the Executive Committee and Internal Control Committee (ICC) meetings in the first half of 2020 and the resulting action plan is regularly monitored by the ICC. The quarterly reports on operational losses were transferred to the CA CIB RPC department using the group-wide application, Olimpia, and a summary by risk category was presented to the Internal Control Committee and the Board of Directors. Within this framework, all incidents involvingmore than€150,000 and/or provisions ofmore than€300,000 are reported to the governing and executive bodies and are individually reported inCACIB’s dedicatedGroup-wide application (Olimpia). Permanent Control declared six incidents in the Olimpia application, including two operational losses of more than €150,000, a provision of more than €300,000, two cases of external fraud in Family Offices and an image risk incident linked to an initial AEI reporting error that has been corrected. The cost of operational risk was up over the year at