2012 Registration document and annual financial report - BNP Paribas

CORPORATE GOVERNANCEReport of the Chairman of the Board of Directors on the manner of preparation and organisationof the work of the Board and on the internal control procedures implemented by the c ompany2■ The Committees were given a presentation on the advanced methodof assessing operational risks, and on the successive developments ofthe regulatory constraint associated with the Basel 2, Basel 2.5 andBasel 3 standards, and their application to the Bank.■ They received a written report from the Statutory Auditors on theirmain findings in relation to deficiencies in internal control, and notedthe main guidelines underpinning the Statutory Auditors’ 2012 auditplan and the key points for attention.4.b Internal Control, Risk Management andCompliance CommitteeSince 11 May 2011, the Internal Control, Risk Management andCompliance Committee has been chaired by Jean-François Lepetit. Itsmembers were Jean-Marie Gianno until 14 February 2012, and MichelTilmant, Nicole Misson and Hélène Ploix from 23 April 2012.At least two thirds of the committee’s members are independent Directorsin accordance with the recommendations of the Afep-Medef Code. Amajority of its members have specific expertise in financial mattersand risk management, either through their training or experience. TheChairman has had executive responsibilities in the banking sector. Hehas been Chairman of the Commission des Opérations de Bourse (COB),a member of the Board of the Autorité des Marchés Financiers (AMF)and Chairman of the Conseil National de la Comptabilité. Another ofthe committee’s members has international experience in bankingmanagement. The committee does not include any members of ExecutiveManagement.An extract from the Internal Rules relating to the duties of the InternalControl, Risk Management and Compliance Committee appears in anappendix to this report.The committee met four times in 2012, with a 100% attendance rate.Market, counterparty and credit risks■ At each of its meetings, the committee reviewed trends in market,counterparty and credit risk based on information presented byGroup Risk Management (GRM). The Head of GRM and his assistantsspecialised in the various risk categories were interviewed by thecommittee and answered its questions concerning their particularareas of responsibility.The committee reviewed the main findings of the Risk Policy Committeeand Country Committee meetings organised by Executive Management.■ It analysed trends in the economy and the markets, and theirimpacts on the Group’s exposures. It reviewed sector and geographicconcentration indicators and examined the Group’s exposure tosovereign debt and its main exposures to financial institutions andcorporates.■ The committee regularly considered trends in Value-at-Risk (VaR) aswell as the results of the stress tests carried out in respect of marketrisks.■ The committee met with the Head of Group Risk Management withoutthe presence of the Chairman and Chief Executive Officer.Liquidity■ The committee was regularly informed of the impacts of the marketcrisis and regulatory developments on the Group’s liquidity policy andliquidity management procedures. During each of its meetings, therewas a very broad exchange of views with the Chairman, Chief ExecutiveOfficer and Head of Asset and Liabilities Management. The Committeereviewed actions taken by Executive Management to address the farreachingchanges in the environment.■ It examined the terms on which the medium and long-term financingprogramme was implemented.■ The committee met with the Head of Asset and Liabilities Managementwithout the presence of the Chairman and Chief Executive Officer.Permanent control, compliance and periodic control■ The committee was provided with the draft 2011 report on Compliance,permanent operational control and business continuity. It wasinformed of the reorganisation of the central Compliance Function andreviewed the report on the results of permanent control. It reviewedkey incidents and the main disputes and litigation pending. It examinedthe permanent control action plan for 2012 and the key points forattention as regards business continuity. It was informed of actionstaken and planned in the area of fraud prevention and protection.It met with the Head of Compliance and Permanent Control, withoutthe presence of the Chairman and Chief Executive Officer.■ The committee received the draft 2011 report on periodic controland reviewed the results of the risk assessment carried out byGeneral Inspection , as well as trends in the number and type ofrecommendations made by the unit. It examined the half-yearlyactivity report on periodic control and General Inspection internalaudit plan.It met with the Head of General Inspection , who is responsible forperiodic control, without the presence of the Chairman and ChiefExecutive Officer.■ It examined the draft 2011 annual internal control report andrecommended its approval by the Board of Directors.■ Throughout the year, the Committee was informed of the penaltiesimposed on major international banks in connection with moneylaundering. It was informed of the internal review of certain U.S. dollarpayments conducted by the Bank as a result of discussions with U.S.authorities in the context of the enforcement of the economic sanctionsdecided by the United States of America.22012 Registration document and annual financial report - BNP PARIBAS 55