45 LIQUIDITY AND FUNDING RISK Details of liquidity and funding risk exposure are provided in Note 3.4 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 Governance Indosuez Wealth 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 and its subsidiaries. On 31/12/2022, 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. The corruption risk map was presented and approved at the Internal Control Committee meeting in the second half of 2022. Similarly, operational risk management is based on a system for collecting data on operational incidents and provisions for operational risk, which makes it possible to measure the cost of risk. The quarterly reports on operational losses were sent to CACIB's RPC department using the groupwide tool and presented to the Internal Control Committees and Boards of Directors in the form of a summary by risk category. Exposure The cost of operational risk was €3.53 million on 31 December 2022, compared with €0.75 million in 2021 and €2.83 million in 2020. As a result, the ratio of operating risk to net banking income will be 2.19% in 2022, compared with 0.58% in 2021 and 2.5% in 2020. Monitoring process The risk measurement and monitoring system is based on a minimum annual review of facilities granted, a sensitive business committee and daily monitoring of compliance with limits. This monitoring of counterparty risk (compliance with limits, monitoring of collateral, etc.) is carried out at a second level by the Credit Risk Manager, who checks it and reports to General Management. Exposure The level of provisioning for credit risk remains limited and well covered due to the nature of the investments, the type and rate of coverage of the guarantees which allow for recovery through the possible use of collateral. As a result, the amount provisioned on 31/12/2022 is €6 million compared to €6.4 million at the end of 2021 and €8.6 million in 2020. Total non-performing and disputed exposures remain under control at €17.2 million in 2022, compared with €10.4 million in 2021 and €12.7 million in 2020, representing less than 1% of balance sheet outstandings of €3.8 billion in 2022, compared with €3.7 billion in 2021 and €3.3 billion in 2020. As most of our exposures are backed by collateral, capital requirements are limited and the riskweighted assets allocated to credit risk are lower than the risk appetite set for the bank’s activity. MARKET RISK Market risk reflects the risk of losses in the value of financial instruments resulting from changes in market parameters such as exchange rates, interest rates, securities prices, derivatives and other assets. The system for supervising client transactions and proprietary trading is based on first-level control of market operators and the risk department (Risk and Permanent Control Department) of CFM Indosuez Wealth. In this context, this department's main tasks are: - Daily monitoring of compliance with the limits granted to the bank's customers; - Daily monitoring of compliance with the limits set by the Group on own-account transactions (Value-At-Risk, Sensitivities); - Daily monitoring of counterparty risks on market transactions; - Monitoring of atypical or unauthorised transactions; - Organising a monthly market committee meeting at which risk monitoring metrics are presented. Details of market risk exposure are provided in Note 3.3 to the consolidated financial statements.
RkJQdWJsaXNoZXIy NzMxNTcx