COMMERZBANK AKTIENGESELLSCHAFT

Reputational risk Reputational risk is the risk that stakeholder groups may lose confidence
in Commerzbank or that its reputation may be damaged as a result of negative events in its
business activities. Stakeholder groups include the public and the media, employees and
customers, rating agencies, shareholders and business partners. Therefore reputational risk
goes hand in hand with communication risk.
The operational divisions, branches and subsidiaries bear direct responsibility, within
the scope of their business operations, for reputational risk arising from their particular
activity. Reputational risk may also stem from other types of risk and even amplify such
risks. A special department in Group Communications is responsible for the management of
reputational risk in an overall Bank context. Its tasks include the timely monitoring, recognition
and response to internal and external reputational risks (early warning function). This
is ensured, for example, via intensive media monitoring and close networking with the
Press Department and Investor Relations.
For this reason, relevant measures and activities relating to business policy are subjected
to careful scrutiny. In particular, Commerzbank avoids business policy measures and transactions
which entail significant tax or legal risks, and also ethical, ecological and social risks.
All relevant credit decisions are voted on individually with regard to any reputational risk
incurred. These votes may result in transactions being declined.
Compliance risk The confidence of our customers, shareholders and business partners in
Commerzbank’s proper and legitimate actions underpins our business activities. This confidence
is based in particular on compliance with applicable regulations and conformity with
customary market standards and codes of conduct (compliance). To reinforce confidence in
the Group’s integrity, all risks arising in this regard are effectively managed. The evergrowing
complexity of national and international laws, regulations and market standards is
taken into account through constant improvements to our management of compliance risk
and through adjustments to reflect current developments and challenges.
Outlook
• The Bank’s risk management activities in the first half of 2012 will concentrate on further
strengthening its capital base. This includes plans to reduce the Group’s risk assets by
around €15bn. We plan to achieve this with an accelerated reduction in peripheral activities,
for example, as well as continued rigorous RWA management. In this way we expect
further reduction of the Core Tier I capital requirement by another €1.3bn approximately.
• In 2011, loan loss provisions for the Group were generally well below the level of the
previous year. This was largely due to the good performance in the first three quarters,
although the slowing economy had its first, comparatively slight, impact on loan loss
provisions in the fourth quarter. This trend will continue in 2012, and, in the second half
of 2012 in particular, we therefore expect an increase in provisioning in portfolios which
are particularly sensitive to changes in the economy. However, at the moment an amount
of €1.7bn seems to be realistic. Nevertheless, the risks related to the macroeconomic
framework are still high. Depending on the macroeconomic development and in particular
the impact of the ongoing sovereign debt crisis on the real economy, significantly
higher provisioning may be necessary.
Financial Statements and Management Report 2011 77