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

The following sections outline the core principles of risk management at Société Générale. The Group’s complete policy is outlined in chapter 9 of the bank’s registration document for 2010, which is available online at http://societegenerale.com.
Given the diversity of the businesses, markets and regions in which Société Générale operates, setting in place a high-performance, efficient risk management structure is a critical undertaking for the bank. The main objectives of the Group's risk management are:
  • To contribute to the development of its businesses by optimising their overall risk-adjusted return,
  • To guarantee the Group’s sustainability as a going concern through the implementation of a high-quality infrastructure for risk measurement and monitoring.
In defining the Group’s overall risk appetite, Société Générale's management takes various considerations and variables into account, including:
  • The relative risk/reward ratio of the bank’s different activities,
  • Learnings sensitivity to economic cycles and credit or market events,
  • Sovereign and macro-economic risks, notably in emerging markets,
  • The aim of achieving a well-balanced portfolio of earnings streams.
Société Générale Group’s risk management governance draws on:
  • The strong implication of all of its management structures, from the Board of Directors to the local management teams,
  • A clear framework of internal procedures and guidelines,
  • Ongoing supervision by an independent body to monitor risks and to ensure that the applicable rules and procedures are effectively applied.
The Group’s risk management is organised around two key principles:
  • Risk assessment by departments that are independent from the business divisions,
  • A consistent approach to risk assessment and monitoring applied throughout the Group.
Compliance with these principles forms part of the integration process 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. Under the supervision of the Group's General Management, Société Générale's functional divisions such as the Risk Division and Finance Division, are independent from its business lines and devoted to ongoing risk management and control.
New Product Committee
Each department is responsible for submitting all new products and activities or products under development to the New Product Committee. Working alongside the Risk Division, the New Product Committee aims to ensure that, prior to the launch of a new activity or product, all associated risks are fully understood, measured, approved and have undergone the necessary procedures and controls using the appropriate information systems and processing chains.
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