Risk Approval

Societe Generale’s credit policy is based on the principle that approval of any credit risk undertaking must be based on sound knowledge of the client and a thorough understanding of the client’s business, purpose and nature, the structure of the transaction and the sources of repayment. Credit decisions must also ensure that the structure of the transaction is adequate to cover the risk of loss in case of default. Risk approval forms part of the Group’s risk management strategy in line with its risk appetite.
The risk approval process is based on four core principles:
  • all transactions involving counterparty risk (credit risk, settlement or non-delivery risk and issuer risk) must be pre-authorised,
  • responsibility for analysing and approving risk lies with the most appropriate business line or risk unit respectively. The business and risk unit examine all authorisation requests relating to a particular specific client or client group, to ensure a consistent approach to risk management,
  • business lines and risk units must be independent of each other,
  • all credit decisions are based on internal counterparty risk ratings, as provided by the business lines and approved by the Risk Division.
The Risk Division submits recommendations to CORISQ on the limits it deems appropriate for particular countries, geographic regions, sectors, products or customer types, in order to reduce risks with strong correlations. The allocation of limits is subject to final approval by the Group’s General Management and is based on a process that involves the operational divisions exposed to risk and the Risk Division. Finally, the supervision provided by CORISQ is supplemented by the Large Exposures Committee.