46 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 in Note 3.4 to the consolidated financial statements. OPERATIONAL RISKS: Indosuez Wealth 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 31/12/2021, each area in the operational riskmap was reviewed and validated by its business line manager as part of the annual process of reviewand backtesting. The cross-divisional mapping of compliance, internal or external fraud and legal risks is also validated annually by Compliance and the Legal department. The corruption risk map was presented and approved at the Internal Control Committee meeting in the second half of 2021. The action plan resulting from the mapping was also presented and is regularly followed up in the Internal Control Committee. Finally, the operational riskmapping systemwas enhanced in 2021 by the transposition of this mapping dedicated to the risks of corruption and influence peddling, in accordancewith the requirements of the French anti-corruption law known as "Sapin II". The quarterly reports on operational losses were transferred to the CACIB RPC department using the group-wide application, Olimpia, and a summary by risk categorywaspresented to the Internal Control Committee and the Board of Directors. As part of this, all incidents involvingmore than €150,000 and/or provisions of more than €300,000 are reported to the governing and executive bodies and are individually reported in the Group-wide tool, Olimpia. In this respect, Permanent Control has reported two image risk incidents with no financial impact or claim to date. With regard to gross operating losses (excluding provisions), after a significant increase in 2020 (€1.96 million), they decreased in 2021 (€0.43 million) reaching levels comparable to 2019 (€0.48 million), despite an increase in the number of transactions. As a result, given the good control of gross operating losses and provisions booked and reversed in 2021, the cost of operating risk at 31/12 is €0.754million compared to €2.830 million in 2020 and €1.426 million in 2019. COMPOSITION OF THE BOARD OF DIRECTORS TheBoard proposed that a newmember, Mr Benoit Fayol, be appointed to theBoard at itsmeeting on 15March. The appointment of Mr Fayol for a period of three years will be proposed for ratification at the next General Meeting. The terms of office as directors of Messrs Jean-Marie Sander and Jean Delamalle will expire at the general meeting of 19 May 2022. Mr Jean-Marie Sander and Mr Jean Delamalle's terms of office will not be renewed. CAPPING OF VARIABLE REMUNERATION In accordancewith Article L511-78 of the codemonétaire et financier (Monetary and financial code - applicable in Monaco), the variable part of the total remuneration of the personsmentioned in Article L511-71 may not exceed the amount of the fixed part of this remuneration. (see Appendix 1). By decision of the ordinary general meeting, it may be increased to twice the amount of the fixed remuneration (i.e. 200%). This 200% cap on the ratio of the variable to the fixed part will be proposed for ratification at the next general meeting.
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