Shareholders and Investors: Corporate Governance and Remuneration Policy

Risk Management

Ibercaja Banco risk management is organized through the “Risk Appetite Framework” (RAF). Ibercaja's RAF has the fundamental objective of establishing a collection of principles, procedures, controls and systems that define, report and monitor the Bank's risk appetite. This is understood to be the level of risk profile that Ibercaja is willing to assume and maintain in terms of type and amount of risk, as well as its tolerance level. It must be oriented towards attaining the objectives of the strategic plan in accordance with the lines of action established therein.
 
The thresholds that allow the risk profile to be placed into the following categories have been defined for each of the metrics taken into consideration in the Risk Appetite Framework
 
bercaja has defined for each of the metrics taken into consideration in the Risk Appetite Framework, different relevant thresholds that allow to manage the bank’s risk profile and its business model.
 
Additionally, Ibercaja has risk management policies and procedures that are reviewed and approved by the Board of Directors on an annual basis.
 
The RAF is consistent with the capital and liquidity planning in Basel Pillar II, which is intended to ensure an adequate relationship between the Company's risk profile and the equity it effectively has on hand. The Entity self-assesses its capital and liquidity on a recurring basis using a process that applies a series of procedures to identify, measure and aggregate risks, determine the capital required to cover them, plan capital in the medium-term and establish the target capital and reserves that allow it to maintain an adequate cushion above the minimum legal requirements.
 
The entry into force of the new Single Supervisory Mechanism (SSM) in November 2014 forces the European financial sector to adapt its risk policies and procedures as well as the control environment. The “Supervisory Review and Evaluation Process” (SREP) is how the SSM performs continuous evaluations of entities. The internal evaluation process for capital and liquidity adequacy under Pillar II (also called ICAAP & ILAAP) is a key part of the SREP process.
 
In accordance with the European Banking Association (EBA) guidelines and recommendations related to the content of recovery plans, the Entity has defined a recovery plan to forecast and guarantee its capacity to react in hypothetical situations in which its solvency or its financing capacity deteriorate. The recovery plan is part of the existing risk management process and it is updated at least on an annual basis.
 
For more information regarding Ibercaja’s risk management policies, please refer to the 2015 Prudential Relevance report here.
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