2018 Registration document and annual fi nancial report - BNP PARIBAS 283
5RISKS AND CAPITAL ADEQUACY PILLAR 3
5
Annual risk survey
➤ TABLE 7: IMMEDIATELY AVAILABLE LIQUIDITY RESERVE
In billions of euros 31 December 2018 31 December 2017
IMMEDIATELY AVAILABLE LIQUIDITY RESERVE (COUNTERBALANCING CAPACITY)(*) 308 285
(*) Liquid market assets or eligible to central banks taking into account prudential standards, notably US standards, minus intra-day payment systems needs.
TOP AND EMERGING RISKS
The identifi cation and monitoring of top and emerging risks are central to BNP Paribas approach to risk management.
These risks are identifi ed, analysed and managed through different work and analyses carried out by the RISK Function, the divisions and the businesses, and through several committees which give rise to actions and decisions:
■ a close follow-up of macroeconomic and fi nancial conditions with the objective of organising them into a hierarchy with regard to the consequences for BNP Paribas portfolio, and designing adverse scenarios. This close monitoring is delivered quarterly to the General Management as well as to the Internal Control, Risk Management and Compliance Committee (CCIRC) through a dashboard presented by RISK ;
■ a close monitoring of the risk profi le in accordance with the directives and thresholds approved by the Board of directors;
■ cross-functional policies on concentration or corporate social responsibility among others;
■ market and liquidity risk decisions made by Group ALM Committee (or ALCo, see section Governance of section 5.3 Risk management) and the Capital Markets Risk Committee (CMRC);
■ key decisions made by committees with respect to specifi c transactions at the highest level;
■ proposals for new activities or new products;
■ portfolio/business reviews by Risk Policy Committees, on topics selected by the Group s Executive Management through the Risk Forum for the upcoming year;
■ proactive and forward-looking discussions on emerging risks and their impacts on the Bank s risk profi le in the Risk Anticipation Committee;
■ an analysis and a monitoring of changes to the regulatory framework and their consequences on the Bank s capital and liquidity management as well as on its activities.
TOP RISKS A top risk is defi ned as having:
■ the potential to have a material impact, across a business area or geographical area, on the fi nancial results, reputation or sustainability of the Group;
■ the potential of occurring in the near future.
The top risks to which the Group is exposed are described below.
Macroeconomic environment
Macroeconomic and market conditions affect the Bank s results. The nature of the Bank s business makes it particularly sensitive to macroeconomic and market conditions in Europe.
In 2018, global growth remained healthy at around 3.7% (according to the IMF), refl ecting a stabilised growth rate in advanced economies (+2.4% after +2.3% in 2017) and in emerging economies (+4.6% after +4.7% in 2017). Since the economy was at the peak of its cycle in large developed countries, central banks continued to tighten accommodating monetary policy or planned to taper it. With infl ation levels still moderate, however, central banks were able to manage this transition gradually, thereby limiting the risks of a marked downturn in economic activity. Thus, the IMF expects the global growth rate experienced over the last two years to continue in 2019 (+3.5%) despite the slight slowdown expected in advanced economies.
