Société Générale / Risk report 2021 - Pillar 3 2020

3 RISKMANAGEMENT ORGANISATION SUITABILITY OF RISK MANAGEMENT SYSTEMS PILLAR 3 - 2021 | SOCIETE GENERALE GROUP | 26 SUITABILITY OF RISKMANAGEMENT SYSTEMS 3.1 The Pillar 3 report, published under the responsibility of Societe has been prepared in compliance with the internal control procedures Generale Group’s Senior Management, sets out, in accordance with the approved by the Board of Directors in the course of the validation of CRR regulation, the quantitative and qualitative information on the Group Risk Appetite Framework and Group Risk Appetite Societe Generale’s capital, liquidity and risk management to ensure Statement. transparency in respect of the various market players. This information ADAPTATION OF THE RISK MANAGEMENT SYSTEM TO COVID-19 The Societe Generale Group has been, like all economic players, strongly impacted by the Covid-19 pandemic and by the economic, financial and social consequences of the crisis. From the outset of the crisis, the risk management organisation has been adapted to ensure the continuity of monitoring and control activities, while remaining attentive to the protection of the Group’s employees. As part of the large-scale roll-out of working-from-home measures, the Group has remained particularly vigilant with regard to the control of its operational risks and the security of its information systems. Governance was also strengthened during this period by activating crisis units and generating more frequent reports, whether intended for Management, the Board of Directors or the supervisor. These included indicators adapted to the context (monitoring of sectors with sensitive activity and/or weakened by the economic crisis, business continuity, etc.). RISK APPETITE 3.2 Risk appetite is defined as the level of risk that the Group is prepared to accept to achieve its strategic goals. Principles governing risk appetite The Group's ambition is to pursue sustainable development based on a diversified and balanced banking model with a strong European anchor and a targeted global presence in selected areas of strong business expertise. The Group also wishes to maintain long-term relationships with its clients built on the mutual confidence deserved and to meet the expectations of all of its stakeholders. This results in: an organisation with 16 Business Units offering various products and p services to the Group's clients in different geographic locations; a balanced capital allocation between activities: p a preponderance of retail banking activities in France and - abroad, which currently represent around 60% of risk weighted assets (“RWA”) of the Group, limitation of Business Unit Global Markets’ share in the RWA of - the Group. In accordance with its client-focused development strategy, the Group also announced the closure of its proprietary trading activities (1) , and promotes a simplification of the products offered, non-bank services activities, in particular Insurance, are - conducted in line with the business strategy; they demonstrate a disciplined risk profile and thus generating a profitability compliant with the Group’s expectations; a geographically balanced model: p in Retail Banking, the Group focuses its development on Europe - and Africa where it enjoys an historic presence, extensive knowledge of the markets and top-tier positions, as regards Global Banking and Investor Solutions, outside the - Europe and Africa zones, the Group targets activities for which it can leverage international expertise; a targeted growth policy, favouring existing areas of expertise, a p sound quality business fund and the search for synergies in the diversified banking model; a positive contribution to the transformations of our economies, in p particular with regard to the technological revolution, and economic, social and environmental transitions; CSR concerns are therefore at the heart of its strategy and the Group's relationships with stakeholders; a strong vigilance as regards its reputation, deemed by the Group to p be a high-value asset which must be protected. In accordance with French banking law, the Group's few residual trading activities with no connection to clients were isolated in a dedicated subsidiary called Descartes (1) Trading, which was closed in February 2020.