2012 Registration document and annual financial report - BNP Paribas

2CORPORATEGOVERNANCEReport 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■ segregation of tasks: this applies to the various phases of a transaction,from origination and execution, to recording, settlement and control;segregation of duties is also reflected in the introduction of specialisedcontrol functions and in a clear distinction between permanent andperiodic control;■ proportionality of risks: the scope and number of controls must beproportional to the level of risk involved. These controls may consistin one or more controls carried out by operational managers and, ifnecessary, one or more permanent control functions; control exercisedby an independent function may take the form of a “second set ofcontrol”. Any disagreements are referred to a higher level in theorganisation (escalation process);■ appropriate governance: involving the various players of the internalcontrol and covering all its aspects, be them organisation, controlsand oversight; the Internal Control Committees are key instrumentsof such governance;■ internal control traceability: this relies on written procedures andaudit trails. Controls, results, exploitation and information reported byentities to higher Group governance levels must be traceable.Periodic control teams (General Inspection ) verify that these principlesare complied with by carrying out regular inspections.ORGANISATION OF INTERNAL CONTROLInternal control at BNP Paribas consists of permanent and periodiccontrols. While they are complementary, they are distinct andindependent of one another:■ permanent control is an overall process for the ongoing implementationof risk management and monitoring of strategic actions. It is carriedout by operational staff, and their line managers, and by independentpermanent control functions either within or independent of theseoperational entities;■ periodic control is an overall process for “ex post” verification of theoperation of the Bank, based on investigations that are conductedby the General Inspection , which performs these functions on anindependent basis.Board of DirectorsExecutive ManagementINTERNAL CONTROL COORDINATION COMMITTEEHead ofGENERALINSPECTIONHead ofFINANCEHead ofRISKMANAGEMENTHead ofCOMPLIANCEHeads ofLEGAL & TAXHeads ofDIVISIONS (1)Heads ofOTHERFUNCTIONSGENERALINSPECTIONFUNCTIONFINANCEFUNCTIONRISKMANAGEMENTFUNCTIONCOMPLIANCE/ 2OPCFUNCTIONLEGAL & TAXFUNCTIONSBUSINESSLINESOTHERFUNCTIONS(1) Retail business lines are treated as divisions.642012 Registration document and annual financial report - BNP PARIBAS