risk and capital management
Undertaking and managing risks is essential to our business and a responsibility of all of our employees. Our risk management is fully integrated into the performance of the business and our risk culture widely disseminated to our employees. We act in a timely and preemptive way focusing on sustainable value creation and client satisfaction.
Undertaking and managing risks is essential to our business and a responsibility of all of our employees. For this reason, we must have well-established objectives and rules with respect to risk management. In this context, risk appetite determines the nature and the level of the risks that are acceptable to us and our culture of risks guides the necessary attitudes to manage them:
it’s based on Board of Directors Statement
We operate based on rigorous ethical and regulatory compliance standards, seeking high and growing results, with low volatility, by means of the long-lasting relationship with clients, correctly pricing risks, well-distributed fund-raising and proper use of capital.
guided by the Principles of Risk Management
▪ sustainbility and customer satisfaction
▪ ethics and respect for regulation
▪ price for risk
▪ operational excelence
▪ risk culture
and monitored by metrics inserted in the day-to-day of business management
▪ composition of results
▪ operational risk
understand, identify, measure, manage and mitigate
risks are essential practices to our activities
how are we structured to manage risks?
Our risk management organizational structure complies with Brazilian and applicable international regulations currently in place and is aligned with best market practices. There is a structure in place for coordination and consolidation of information and related processes, which are all subject to verification by independent validation, internal controls and audit areas. The following committees are part of our risk and capital management governance structure:
organizational risk management structure
summary of risk factors
An investment in our common shares is subject to a number of risks, including risks relating to the nature of our business as a holding company of banking, insurance and financial institutions and those related to our operations in Brazil. The following list summarizes some, but not all, of these risks. Please read the information in the section entitled “Risk Factors” for a more thorough description of these and other risks.
Our Board of Directors is the main body responsible for our capital management, and for approving our capital management policies and guidelines regarding our capitalization level. It is also responsible for approving the ICAAP (Internal Capital Adequacy Assessment Process) report, a process which is intended to assess our capital adequacy. At the executive level, corporate bodies are responsible for approving risk assessment and capital calculation methodologies, as well as reviewing, monitoring and recommending capital-related documents and topics to the Board of Directors.
The Basel III Framework introduced global liquidity standards, providing for minimum liquidity requirements and aims to ensure that banks can rely on their own sources of liquidity, leaving central banks as a lender of last resort. Basel III provides for two liquidity ratios to ensure that financial institutions have sufficient liquidity to meet their short-term and long-term obligations: (i) the liquidity coverage ratio, or LCR, and (ii) the net stable funding ratio, or NSFR. We believe that the LCR and NSFR provide more relevant information than an analysis of summarized cash flows.