2020 Universal registration document and annual financial report - BNP PARIBAS118

2 CorPorate GovernanCe and internal Control

2

Internal control

or attention concerning the effectiveness of the controls and the degree of reliability of the valuation and results determination process. This quarterly committee meeting brings together the Businesses, Group Finance and the Divisions concerned, the ALM Treasury and the Risk Function. Intermediary PFC committees complete this system and aim to define project priorities, monitor their implementation and thoroughly examine certain technical elements.

Development of the system

The control system is continuously adapted to the Group s requirements. The procedures described form part of an evolving system that aims to guarantee an adequate level of control throughout the Group.

In particular, the quality of the accounting certification process is regularly reviewed with the divisions/business lines, for instance with the preparation of quantitative indicators for some controls, targeted cross-functional reviews of a major control and ad hoc reviews with the divisions/business lines on specific points for improvement in various areas. These reviews are supplemented by presentations to the various committees in the Finance channel and training sessions. Group procedures clarifying some major controls, and detailed instructions aimed at ensuring consistent responses and adequately-documented processes are also distributed. These Group procedures and instructions are extended where necessary at divisions/business lines level to cover issues specific to them.

Similarly, the certification system of the data contributing to the calculation of the capital solvency ratio is subject to adjustment in order to take into account developments in the processes and the organisation, and to capitalise on indicators and controls in place in the various sectors in connection with the improvement program on the reporting and the quality of the data.

In addition, for liquidity reporting, changes in processes and tools are carried out regularly in order to adapt to the new regulatory reporting demands, and specific actions are taken with the various contributors in order to enhance the quality and controls for the channel.

In 2020, the Group continued to adapt its system to improve the quality and integrity of the data required to produce the reports covering the different types of risks to which BNP Paribas is exposed (credit, market, liquidity, operational), and improve the consistency of related reporting at all levels of the organisation during normal periods as well as during stress or crisis periods.

After completing the dedicated RaDAR program at the end of 2019 (Risk Data Aggregation and Reporting) to comply with the principles set by the Basel Committee for the aggregation of risk data and risk reporting ( Principles for effective risk data aggregation and risk reporting ) and appointing a Group Chief Data Officer (CDO) and a Risk/Finance CDO in addition to the existing system of Chief Data Officers within the Businesses and functions, major initiatives were launched concerning:

■ the adaptation of the Group s Data Management strategy, including data compilation, monitoring and quality control, the organising the processes supporting these activities, and the use of adapted technologies and strengthening the data culture within the Group. In particular, with the introduction of the Data Management by Design approach, the Single Channel organisational model and improvement in the system to resolve identified data issues was implemented;

■ changes in data governance, with in particular the creation of a Group Data Board, a Shared Data Council and committees to assess quality and monitor remedial actions at Group, businesses/functions and entities;

■ emphasising the implementation of the Data strategy as part of the Group s IT strategy, with the permanent presence of the Group CIO on the Group Data Board, the assignment of data responsibilities within the Group IT function and the participation in the main Data projects.

PERIODIC CONTROL General Inspection has a dedicated Finance channel (called the Finance Audit Line ) with a team of specialist inspectors in accounting and financial auditing, thus reflecting the Department s strategy of having an auditing capability in accountancy, as regards both the technical complexity of its work and its coverage of accounting and financial risk.

Its action plan is based on an annual risk assessment exercise, the practical details of which have been established by General Inspection based on the risk evaluation chart defined by the Risk Function.

The core aims of the team are as follows:

■ establishing a hub of accounting and financial expertise in order to reinforce the capability of General Inspection when carrying out inspections in these areas;

■ disseminating internal audit best practices and standardising the quality of related audit work;

■ identifying and inspecting areas of accounting and financial risk at Group level.