2020 Universal registration document and annual financial report - BNP PARIBAS 465
5risks and CaPital adequaCy Pillar 3
5
Operational risk
RISK-WEIGHTED ASSETS AND CAPITAL REQUIREMENT
➤ TABLE 102: OPERATIONAL RISK CAPITAL REQUIREMENT AND RISK-WEIGHTED ASSETS
In millions of euros
31 December 2020 31 December 2019 Variation
RWAs Capital
requirements RWAs Capital
requirements RWAs Capital
requirements
Advanced measurement approach (AMA) 55,800 4,464 54,278 4,342 1,522 122
Standardised approach 11,203 896 10,243 819 960 77
Basic indicator approach 3,623 290 4,371 350 (748) (60)
TOTAL OPERATIONAL RISK 70,626 5,650 68,891 5,511 1,735 139
The EUR 1.7 billion increase in operational risk-weighted assets in 2020 is mainly due to the increase in average exposure indicators in the fourth quarter, in line with the growth in revenues. This change has been seen in particular for entities under the advanced measurement approach (risen to the standardised approach level since 2018), as well as for entities calculated directly using the standardised approach.
RISK MITIGATION TECHNIQUES AND INSURANCE POLICIES BNP Paribas Group deals with its insurable risks with the triple aim of protecting its balance sheet, its profit and loss account and its staff. Its insurance set-up is based on risk identification and assessment, underpinned by risk mapping and by analysis of operational loss profile, both historical and forward-looking.
The Group purchases insurance from leaders in the insurance market, covering computer crime, fraud, theft, business disruption, liability and other risks for which it may be held responsible. In order to optimise costs whilst effectively managing its exposure, the Group retains some well-identified risks whose impact in terms of frequency and cost is known or can be adequately estimated.
In selecting insurers, the Group pays close attention to the credit rating and claims paying ability of the companies concerned. Detailed information on risks incurred by BNP Paribas as well as risk assessment visits, enable insurers to assess the quality risk prevention within the Group, as well as the safeguard measures put in place and upgraded on a regular basis in light of new standards and regulations.
