2012 Registration document and annual financial report - BNP Paribas

RISKS AND CAPITAL ADEQUACYOperational risk5CAPITAL REQUIREMENT➤ TABLE N° 53: OPERATIONAL RISK CAPITAL REQUIREMENTCapital requirementOperational riskIn millions of euros31 December 2012 31 December 2011 VariationAdvanced Measurement Approach (AMA) 2,847 3,090 (243)Standardised approach 761 758 3Basic indicator approach 484 521 (37)TOTAL OPERATIONAL RISK 4,092 4,369 (277)Half of the EUR 277 m illion fall in the capital requirement for operationalrisk-weighted assets (down EUR 3.5 billion) stemmed from a methodeffect caused by the convergence of the Fortis scope with the Group’sAMA model in the first quarter of 2012, as well as a scope effect related tothe derecognition of a few legal entities, the largest one being Klépierre.RISK REDUCTION THROUGH INSURANCE POLICIESRisks incurred by the BNP Paribas Group may be covered by majorinsurers with the dual aim of protecting its balance sheet and profit andloss account. The Group’s insurance policy is based on a risk identificationand assessment procedure underpinned by risk mapping, detailedoperating loss data and forward-looking analysis.The Group purchases insurance from leading insurers in the marketcovering fraud, theft, property and casualty, business disruption, liabilityand other risks for which it may be held responsible.In order to optimise costs and effectively manage its exposure, the Groupself-insures some well identified risks whose impact in terms of frequencyand cost is known or can be adequately estimated.In selecting insurers, the Group pays close attention to the credit ratingand claims paying ability of the companies concerned.Detailed information on risks incurred by BNP Paribas as well as riskassessment visits, enable insurers to assess the quality of coverage andrisk prevention within the Group, as well as the safeguard measures putin place and upgraded on a regular basis in light of new standards andregulations.52012 Registration document and annual financial report - BNP PARIBAS 315