Relationships - Banco Itaú

Corporate Governance
With the significant diversification of risks by
our business units, the Organization maintains
a reduced overall exposure to market risk, when
compared with its capital.
Liquidity Risk
Liquidity risk is designed to detect imbalances
between negotiable assets and payable
liabilities, or when there is a mismatch
between payments and receipts that might
affect our payment capability, considering the
different currencies and settlement terms for
rights and obligations.
Liquidity risk management uses best
practices to avoid cash shortages and
difficulties in honouring payments due.
We have established guidelines and limits,
and compliance is regularly reviewed by
technical committees designed to ensure
an additional safety margin beyond the
minimum projected security needs. Liquidity
management policies and their associated
limits are established based on periodically
reviewed prospective scenarios, and on the
limits set by the Senior Institutional Treasury
Liquidity Commission.
Operational Risk
Operational risk is the risk of loss resulting
from inadequate or failed internal processes,
people and systems, or from external
events. This category also includes legal risks
associated with inadequate or incomplete
contracts, as well as penalties incurred due
to non-compliance with legal provisions and
compensation for damages to third parties
arising from our activities.
During the Itaú Unibanco merger process,
for example, operational risks are carefully
monitored once they become part of the
migration of branches and systems.
Under our integrated operational risk
management policy, approved by the Board
of Directors, we have adopted all Central Bank
requirements with respect to operational risk
management, pursuant to CMN Resolution
3380 of June 2006, which is based on the
principles and good practices of Basel II.
The operational risk management governance
structure is made up of the Board of
Directors, the Audit Committee, Internal
Audit, the President’s Office plus Executive
Officers and Related Technical Risk areas. This
structure is responsible for the operational
risk management process, which includes
four phases: identification, evaluation,
management and monitoring.
We employ management models for financial
evaluation by business line, quantifying
operational risks incurred by using statistical
models that allow provisioning of reserves
for expected losses and allocation of capital
for unexpected losses. This gives us a more
refined pricing process for products and
services offered to the market, and follows the
criteria of the Basel II Capital Accord, within
the timeframes set by the regulator.
Underwriting Risk
Underwriting risk is applicable to insurance
companies and is associated with the
probability of decision errors in determining
the price and/or calculation of technical
reserves for insurance products, as well as in
monitoring the decisions made. Similar to
Basel II + , the International Association of
Insurance Supervisors (IAIS) guides insurance
companies on employing risk management
systems which supplement their minimum
capital and solvency margin systems.
Our team specializes in underwriting risk
analysis and control for insurance products,
and builds mathematical models that
capture such risks in the proper allocation of
managerial capital.
Market Risk Indicators
The following Value at Risk table consolidates
Itaú Unibanco’s total VaR, covering the
portfolios of: Itaú BBA, Banco Itaú Europa,
Banco Itaú Argentina, Banco Itaú Chile and
Banco Itaú Uruguay. The portfolios of Itaú
Unibanco S.A. and Itaú BBA are grouped
together, separated by risk factor.
+ Basel II Capital Accord – Replaces the Basel I agreement which was signed in the Swiss city of Basel in 1988. The new accord was ratified by more
than 100 countries and seeks to establish minimum capital requirements to be held by commercial banks as a precaution against credit risk. Basel II
is built on three pillars: Capital (save); Supervision, (inspect) and Transparency and Market Discipline (disclose), in addition to 25 basic accounting and
supervision principles.
36 Itaú Unibanco Holding S.A.