RISK MANAGEMENT

Crédit Agricole is the number one provider of financing in the French economy. It supports all of its customers in their personal and professional projects. Guided by a culture of prudence, the Group has developed a comprehensive framework for managing the risks related to its business activities.

GROUP RISK APPETITE STATEMENT

Crédit Agricole Group has published a risk appetite statement in compliance with European regulations⁽¹⁾. This statement is an integral, structuring part of the governance framework covering the Group’s strategy, commercial objectives, risk management and financial management.

Risk appetite refers to the type and aggregate level of risk that the Group is prepared to take on within the framework of its strategic objectives. It is determined on the basis of Crédit Agricole’s financial and risk management policies. Risk appetite is one of the factors that Executive Management and the Board of Directors take into account to define the Group’s growth path and devise the related operating strategies, in keeping with the Medium-Term Plan.

The Group’s risk appetite is determined, in particular, with reference to its financial and risk management policies, which are based on six areas:

• a selective, responsible financing policy that combines a prudent lending approach guided by risk strategies, a focus on corporate social responsibility and a system of delegated authorities;
• a focus on maintaining low exposure to market risk;
• strict management of exposure to operational risk;
• mitigation of compliance risk;
• careful tracking of changes in risk-weighted assets;
• control of asset-liability management risks.

The Risk Committee and Board of Directors regularly review and monitor the Group’s risk profile. The Executive Committee receives regular updates on the status of the Group’s risk profile in relation to its risk appetite.

Risk management is an integral part of Crédit Agricole’s internal control system. The Group implements the necessary resources to manage risks and maintain an appropriate alignment with risk appetite by leveraging:

• the three lines of defence involved in the Group’s internal control: the Operational business lines, the Risk Management and Compliance business lines, and the Audit business line;
• a process to identify key risks and create a shared base for identification, prevention, assessment, risk appetite management, stress tests, risk strategies, ICAAP and internal control;
• specific committees that participate in Group risk management.

URD Chap. 5

CRÉDIT AGRICOLE AND CRÉDIT AGRICOLE S.A. KEY RISKS IN 2019

The global economic slowdown observed in 2019 did not generally lead to a significant deterioration in the quality of stocks or marked adverse changes in risk indicators despite some tensions on the corporate portfolio with the default over the year of a limited number of high amount cases. The major sectoral attention points are global, heavy industry and metals, oil and gas, automotive (including automotive distribution), shipping, retail and commercial real estate. In France, particular attention was paid to the sugar and pork sectors, as well as to distribution and tourism.
In 2019, the Group conducted an in-depth analysis to identify CSR issues and key risks to our activities, business model and geographic locations. This work was conducted by the CSR, Risk, Compliance and Human Resources departments.

DECREASE IN COST OF RISK/OUTSTANDING⁽²⁾

• T4-17: 17 29
• T1-18: 17 29
• T2-18: 18 26
• T3-18: 18 25 
• T4-18: 1823
• T1-19: 17 21
• T2-19: 19 25
• T3-19: 20 29
• T4-19: 20 32
• Crédit Agricole Group 2022 MTP assumptions: ~ –25pb
• Crédit Agricole S.A. 2022 MTP assumptions: ~ –40pb

(1) EU regulation 575/2013, Article 435 (1)(f). 

(2) In basis points over four rolling quarters.