CFM INDOSUEZ Wealth Management - 2019 annual report

For information purposes, a rough calculation puts our entity’s NSFR at between 115% and 120%. Liquidity risk is also monitored using a table of projected cash flows. This was implemented at CFM Indosuez Wealth Management following a request by the General Secretariat of the ACPR regarding the identification, measurement, management and control of liquidity risk. It follows Group instructions in line with Basel requirements. Details of liquidity and funding risk exposure are provided in Note 3.3 to the consolidated financial statements. Fair value hedging of interest rates: Fair value hedges include the hedging of loans, securities and fixed rate deposits. These hedges convert fixed rate assets or liabilities into variable rate items. · Micro-hedging policy: assets or liabilities of significant amounts and/or maturities (e.g. long-term loans to clients, etc.) are systematically micro- hedged using swaps. · Macro-hedging policy: assets or liabilities of amounts that do not reach the feasibility threshold for micro-hedging but which have significant maturities are grouped with similar items and are macro-hedged. CFM Indosuez Wealth Management’s hedging instruments are fair value hedges or cash flow hedges. They are presented in Note 19 to the bank’s separate financial statements. 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. 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. All mapped activities had been approved as of 31 December 2019. CFM Indosuez Wealth Management’s operational risk map for 2019 included 48 areas, 230 processes and 1,220 identified risk events, including 27 significant events (those with a high net risk rating according to the CA CIB risk matrix published in 2018). A mapping of the risks of corruption and influence peddling was added to the operational risk map in Q4 2019 with the assistance of Deloitte, in accordance with the requirements of the French anti-corruption law, known as the Sapin II law. This map covers six themes and 37 risk events. The net risk was deemed “high” for seven of these events, and “major” for two others. Each quarter, Permanent Control produces a table of operational risk losses and cases of attempted or actual fraud. It transfers the table to the CA CIB RPC department using the group-wide application, Olimpia, and a summary by risk category is presented to the Internal Control Committee and the Board of Directors. When collecting data, Permanent Control identifies incidents reported in various information channels, whether or not they arise from client complaints, as well as fraud and allocations to and reversals of provisions for disputes. All incidents involving more than €150,000 are immediately reported to the governing and executive bodies. Incidents and cases of fraud in excess of €150,000 that are prevented are individually reported in CA CIB’s dedicated application (Olimpia). In 2019, two incidents with a limited impact were identified. statutory auditors New Statutory Auditors must be appointed. The Board of Directors proposes appointing Didier Mekies (PWC) and François Brych (Mazars) as permanent statutory auditors and Sandrine Arcin as alternate statutory auditor for the 2020, 2021 and 2022 financial years. 38 CFM Indosuez Wealth Management