3.6 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. Each area of the operational risk map is reviewed and validated annually by the Head of each Business Line in association with the Permanent Control department. The cross-divisional mapping of compliance, internal or external fraud and legal risks is also validated annually by Compliance and the Legal department. A summary of the operational risk map and the review progress report are presented annually to the Internal Control Committee, which approves the mapping, the action plan and the results of backtesting. 3.7 CAPITAL MANAGEMENT AND REGULATORY RATIOS In accordance with European Regulation 575/2013 (CRR), CFM Indosuez Wealth is subject to compliance with the solvency, leverage and liquidity ratios. CFM Indosuez Wealth manages its capital in compliance with the regulatory capital levels stipulated by European directive No. 2013/36 and EU regulation No. 575/2013, applicable since 01 January 2014, and demanded by the relevant authorities, the European Central Bank (ECB) and the ACPR, the French regulatory and resolution supervisory authority, to cover weighted credit risk, operational risk and market risk. This regulatory mechanism is intended, notably, to strengthen the quality and quantity of regulatory capital required, better identify the risks, and include capital buffers and additional requirements as regards liquidity and leverage. There are three categories of capital: - Common Equity Tier 1 (CET1), determined on the basis of restated shareholders' equity, including certain capital instruments classified as Additional Tier 1 (AT1), and deductions for intangible assets; - Tier 1 Equity, consisting of Common Equity Tier 1 and Additional Tier 1 perpetual capital instruments; - total equity, which is made up of Tier 1 capital and Tier 2 capital (T2) composed of subordinated instruments with a minimum maturity at issue of 5 years. Tier 1 and Tier 2 instruments must meet demanding inclusion criteria in order to be recognised as capital. If old instruments are not or no longer eligible, they are subject to a "grandfathering" clause that allows them to be phased out of capital, Deductions relating to investments in other credit institutions reduce the total amount of this capital and, depending on the type of instrument, are applied to the CET1, Tier 1 (AT1) or Tier 2 (T2) amounts respectively. They also apply to holdings in the insurance sector when the institution does not benefit from the special dispensation for financial conglomerates, In both 2024 and 2023, CFM Indosuez Wealth complied with the regulatory requirements in force. 1 As supplemented and amended, including in particular through Regulation (EU) 2019/876 of June 2019, regulation (EU) 2020/873 of June 2020 and Regulation (EU) 2024/1623 of June 2024 for regulatory requirements with an early application date of 9 July 2024. 2 As supplemented and amended, including in particular through Directive (EU) 2019/878 of June 2019. Annual Report 2024 111
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