ourexpertise - Crédit Agricole CIB

CORPORATE GOVERNANCE 2Organisation of the internal control systemBasic principlesThe organisational principles and components of Crédit AgricoleCIB’s internal control systems, which are common to all CréditAgricole Group entities, are as follows:• reporting to the decision-making body (risk strategies, limitsdefi ned and their use, internal control activities and results);• the direct involvement of the executive body in the organisationand operation of the internal control system;• complete coverage of activities and risks;• responsibility of all persons involved;• clear defi nition of tasks;• separation of commitment and control functions;• formal and up-to-date delegations of powers;• formal and up-to-date standards and procedures, especially foraccounting and information processing.These principles are supplemented by:• measurement, supervision and control mechanisms for credit,market, liquidity, fi nancial and operational risks (transactionprocessing, information systems processes), accounting risk(including quality of fi nancial and accounting information), noncompliancerisks and legal risks;• a control system, forming part of a dynamic and corrective process,that includes permanent controls performed by operatingunits or dedicated staff, and periodic controls (Group FinancialControl, Audit).The internal control system is also designed to ensure that thecompensation policy is consistent with risk management andcontrol objectives, particularly with regard to market operators.At the beginning of 2009, the Bank initiated a project to review theconditions of the existing system, concurrently with cross-industrywork. In keeping with the recommendations of the FédérationBancaire Française (FBF) and the Rules of Procedure of the Boardof Directors , the Bank created the Global Compensation ReviewGovernance Committee, which is chaired by the Chief ExecutiveOffi cer. Its members include the Deputy Chief Executive Offi cersand the Heads of the Risk Management and Permanent Controls,Human Resources and Global Compliance Departments. Its roleis to insure that proposals submitted to the Compensation Committeeare consistent with the principles of the compensationpolicy (circular sent out in September).The internal control system is also designed to ensure that thecorrective measures adopted are applied within a reasonabletime.Monitoring of the systemIn order to ensure that the internal control system is consistentand effi cient and that the above-mentioned principles are appliedby all entities within the scope of Crédit Agricole CIB’s internalcontrol system, three separate persons responsible for PeriodicControl (Audit-Inspection), Permanent Risk Control and ComplianceControl have been appointed.The Internal Control Committee, chaired by the Chief ExecutiveOffi cer, is responsible for:• reviewing internal control procedures and the control systemimplemented;• examining the main risks to which Crédit Agricole CIB is exposedand any changes in risk measurement systems;• deciding on remedial measures to be taken to addressweaknesses identifi ed during audits, either in internal controlreports or as a result of problems that have occurred;• monitoring the fulfi lment of commitments made following internaland external audits;• taking any decisions necessary to make up for weaknesses ininternal control.Its members are the Heads of Group Internal Audit, Internal Audit,Corporate Secretary, Finance, Risk Management and PermanentControls, Compliance and Fraud Prevention, Legal and, dependingon the matters under discussion, the heads of other Bankunits.The Committee met four times in 2010.Local internal control committees have also been set up in severalsubsidiaries and branches, both in France and abroad.Role of the supervisory body:Board of DirectorsThe Board of Directors is kept informed of the organisation, activitiesand results of internal control and of the main risks faced bythe Bank. It approves the general organisation of the bank and ofits internal control system.Within the Board of Directors, the Audit Committee has the taskof examining and monitoring the internal control and risk managementsystem and taking note of the work of the heads of internalcontrol (the description of the Audit Committee’s responsibilitiesis detailed on page 43 – Responsibilities of the Audit Committee)and to monitor any event of fraud, or any other event whether ornot detected by internal control procedures in accordance withthe criteria and signifi cance thresholds defi ned by the Board.In addition to regular information given to the Board of Directorsmostly on global risk limits and exposures, the following annualreports are systematically submitted to the Audit Committee:• a report on the conditions under which internal control is carriedout,• a report on risk measurement and monitoring,• a report by the person in charge of compliance for investmentservices on the organisation of this function, its duties and responsibilities,any observations and the measures adopted.These annual reports relative to 2010 will be presented to theAudit Committee meeting in April 2011 and to the Board ofDirectors’ meeting in May 2011. The half-yearly report on internalcontrol at 30 June 2010 was examined by the 8 November 2010Audit Committee meeting.In 2010, quarterly reports on risk management and the mainexposures were presented to the Board meetings of 11 May,24 August and 9 November 2010. The summaries of the risksituation at 31 December 2009 and 30 June 2010, and then at31 December 2010 were examined respectively at the Boardmeetings of 23 February 2010, 24 August 2010 and 22 FebruarySHELF-REGISTRATION DOCUMENT CRÉDIT AGRICOLE CIB 2010 47