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RISK MANAGEMENT STRATEGY

Societe Generale implements the recommendations given in the AFEP-MEDEF* report of September 2002 on the corporate governance of listed companies.

Risk management strategy

Given the diversity of businesses, markets and regions in which the Societe Generale Group operates, the implementation of a high performance and efficient risk management structure is a critical undertaking for the bank. Specifically, the main objectives of the Group’s risk management are to:
  • contribute to the development of the Group’s various businesses by optimising their overall risk-adjusted profitability,
  • to guarantee the Group’s sustainability as a going concern, through the implementation of an efficient system for risk analysis, measurement and monitoring.
In defining the Group’s overall risk appetite, the General Management takes various factors and variables into account, including:
  • the relative risk/reward of the Group’s various activities,
  • earnings sensitivity to economic cycles and credit or market events,
  • sovereign and macro-economic risks, both on the emerging markets and in developed countries,
  • the balance in the portfolio of earnings streams.
Societe Generale Group’s risk management governance is based on:
  • strong managerial involvement throughout the entire organisation, from the Board of Directors down to operational field management teams,
  • a tight framework of internal procedures and guidelines,
  • permanent supervision by an independent body to monitor risks and to enforce rules and procedures.
The Group’s risk management is organised around two key principles:
  • risk assessment departments that are independent of the operating divisions;
  • risk monitoring as well as a consistent approach to risk assessment applied throughout the Group.
Compliance with these principles forms part of the integration plans for subsidiaries acquired by the Group.
Group risk management is governed by two main bodies: the Board of Directors, via the Audit, Internal Control and Risk Committee, and the Risk Committee. The Group’s corporate divisions, such as the Risk Division and Finance Division, which are independent from the business divisions, are dedicated to permanent risk management and control under the authority of the General Management.
Each division is responsible for ensuring that all new products, businesses or activities comply with New Product procedures.