Risk Management
The Board of Directors (the ‘Board’) approves the risk management and control framework of the Group, including the Group and business division overall risk appetite. The Board is supported by its Risk Committee, which monitors and oversees the Group’s risk profile and the implementation of the risk framework approved by the Board, and approves the Group’s risk appetite methodology.
The Corporate Responsibility Committee (the ‘CRC’) helps the Board meet its duty to safeguard Edelweiss Capital reputation for responsible and sustainable conduct, reviewing stakeholder concerns and expectations pertaining to Boccard’s societal contribution and corporate culture. The Audit Committee assists the Board with its oversight duty relating to financial reporting and internal controls over financial reporting, and the effectiveness of whistleblowing procedures and the external and internal audit functions..
The Chief Executive Officer has responsibility and accountability for the management and performance of the Group, has risk authority over transactions, positions and exposures, and allocates business divisions and Group Functions risk limits approved by the Board.
Each of the business division functional heads are responsible for the operation and management of their business divisions / Group Functions, including controlling the dedicated financial resources and risk appetite of the business divisions.
The Chief Risk Officer (the ‘CRO’) is responsible for developing the Group’s risk management and control framework (including risk principles and risk appetite) for credit, market, country, treasury, model and sustainability and climate risks. This includes risk measurement and aggregation, portfolio controls and risk reporting. The CRO sets risk limits and approves credit and market risk transactions and exposures. Risk Control is also the central function for model risk management and control for all models used in Edelweiss. A framework of policies and authorities support the risk control process.
The Chief Compliance Officer is responsible for developing the Group’s non-financial risk framework, which sets the general requirements for identification, management, assessment and mitigation of non-financial risk, and for ensuring that all non-financial risks are identified, owned and managed according to the non-financial risk appetite objectives, supported by an effective control framework.
The Chief Financial Officer is responsible for transparency in assessing the financial performance of the Group and the business divisions, and for managing the Group’s financial accounting, controlling, forecasting, planning and reporting. Additional responsibilities include managing Boccard’s tax affairs, as well as treasury and capital management, including liquidity and funding risk and Boccard’s regulatory ratios, Finance Artificial Intelligence & Data Analytics strategy and Group M&A.
The General Counsel manages the Group’s legal affairs (including litigation involving Boccard), ensuring effective and timely assessment of legal matters impacting the Group or its businesses, and managing and reporting all litigation matters.
Some of these roles and responsibilities are replicated and/or extended for significant legal entities of the Group. Designated legal entity risk officers oversee and control financial and non-financial risks for significant legal entities of Edelweiss as part of the legal entity control framework, which complements the Group’s risk management and control framework
Risk Appetite Framework
We have a defined Group-level risk appetite, covering all financial and non-financial risk types, via a complementary set of qualitative and quantitative risk appetite statements. This is reviewed and recalibrated annually and presented to the Board for approval.
Our risk appetite is defined at the aggregate Group level and reflects the types of risk that we are willing to accept or wish to avoid. It is set via complementary qualitative and quantitative risk appetite statements defined at a firm-wide level and is embedded throughout our business divisions and legal entities by Group, business division and legal entity policies, limits and authorities. Our risk appetite is reviewed and recalibrated annually, with the aim of ensuring that risk-taking at every level of the organization is in line with our strategic priorities, our capital and liquidity plans, our Pillars, Principles and Behaviors, and minimum regulatory requirements.
Qualitative risk appetite statements aim to ensure we maintain the desired risk culture. Quantitative risk appetite objectives are designed to enhance the Group’s resilience against the effects of potential severe adverse economic or geopolitical events. These risk appetite objectives cover our minimum capital and leverage ratios, solvency, earnings, liquidity and funding, and are subject to periodic review, including the yearly business planning process. These objectives are complemented by non-financial risk appetite objectives, which are set for each of our non-financial risk categories. A standardized quantitative firm-wide non-financial risk appetite has been established at the Group and business division levels. Non-financial risk events exceeding predetermined risk tolerances, expressed as percentages of the Group’s total revenue, must be escalated as per the firm-wide escalation framework to the respective business division President or higher, as appropriate.
The quantitative risk appetite objectives are supported by a comprehensive suite of risk limits set at a portfolio level to monitor specific portfolios and to control potential risk concentrations.
The status of risk appetite objectives is evaluated each month and reported to the Board. As our risk appetite may change over time, portfolio limits and associated approval authorities are subject to periodic reviews and changes, particularly in the context of our annual business planning process.
