RISK MANAGEMENT STRATEGY

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

Risk management strategy

Société Générale operates in business lines, markets and regions which generate a range of risks whose frequency, severity and volatility can be of varying and significant magnitudes. As such, the accurate calibration of its risk parameters, the development of in-depth risk management expertise, and the implementation of high-performance risk management structures are critical for the Group.
The main objectives of the bank’s risk management framework are therefore:
  • to contribute to the development of the Group’s various business lines by optimising their overall risk-adjusted profitability;
  • to guarantee the Group’s sustainability through the implementation of quality risk management infrastructures.
To optimise the Group’s overall risk exposure, Société Générale's general management takes a number of considerations and variables into account, including:
  • the risk/reward ratio of the bank’s activities;
  • the sensitivity of its results to business, credit and economic cycles;
  • sovereign and macro-economic risks, notably within the emerging markets;
  • the aim of achieving a well-balanced portfolio of earnings streams.
Société Générale Group’s risk management governance is dependent on:
  • the strong implication of its management, from the Board of Directors to its local operational teams;
  • a clear framework of internal procedures and guidelines;
  • continuous supervision by an independent body.
The Board of Directors defines and is responsible for the Group's risk management strategy and its implementation. In particular, the Board ensures the adequacy of the Group’s risk management infrastructures, monitors the overall risk exposure of its activities and approves the yearly brackets for market and credit risk. Presentations on the main aspects of and any changes to the Group’s risk strategy are made to the Board by the General Management once a year or more frequently as circumstances dictate.
Within the Board, the Audit Committee is specifically responsible for examining the consistency of the Group's internal framework for risk management and compliance with all applicable laws and regulations. It reviews the procedures for controlling market risks and structural interest-rate risk and is consulted when limits are set. The Committee also issues an opinion on the Group’s overall provisioning policy as well as on any major individual provisions. Finally, it also examines the report on risk management and control submitted each year to the French Banking Commission.