2018 Registration document and annual fi nancial report - BNP PARIBAS432
5 RISKS AND CAPITAL ADEQUACY PILLAR 3
5
Operational risk
■ a legal coordination mechanism allowing the sharing of information and expertise, whose main components are:
■ the France and Europe Legislation Tracking Committees, which consists of monitoring of draft legislation and provide analysis and interpretation of the texts of new laws and regulations, as well as details of changes in French and European law,
■ Legal Practices, specialised teams by area of legal expertise tasked with managing issues relative to the Group s businesses and geographies within LEGAL , and with escalating major legal risks that fall within their scope,
■ LEGAL s information technology and intellectual property charter, signed by Executive Board legal offi cers, and which includes a plan to develop LEGAL teams digital expertise;
■ an oversight of legal risks via a number of actions:
■ management of a harmonised and robust system to manage global legal risks to provide overall supervision and proactive management of major legal risks, including namely defi ning a suitable system for ex post facto control by: (i) defi ning legal risk control plans, (ii) permanent control activities across all legal areas,
■ management of disputes, litigation and legal investigations,
■ provision of advice on the legal aspects of fi nancial security,
■ constituting and managing panels of legal experts, i.e. selecting legal fi rms with which the Group works,
■ management and supervision of human resources litigation and disputes in various juridictions,
■ defi ning and ensuring the consistency of the Group s legal policy;
LEGAL is a global function made up of legal and paralegal teams located in around sixty countries, all reporting directly to the Group General Counsel.
The LEGAL Charter was updated in April 2018. The function is organised around the following principles:
■ independence and integration:
■ full integration of the function,
■ a reporting link between the LEGAL teams in the divisions and business lines and the Group General Counsel,
■ a greater role for the Group General Counsel in overseeing highly sensitive cases,
■ unifi ed and centralised budget management ensuring autonomous and consistent management of LEGAL ;
■ decentralisation:
■ close links with business lines to guarantee the function stays close to the Bank and to its customers,
■ a functional link between the LEGAL teams in the divisions and business lines and the Head of the Business Line;
■ cross-functionality:
■ from centralised teams of experts to a more comprehensive and cross-functional role,
■ specialised Legal Practices (Group Dispute Resolution, Company Law, Mergers and Acquisitions, Information Technology and Intellectual Property, Legal and Regulatory Intelligence and Competition Law);
■ responsibility:
l awyers are responsible for managing legal risks in the Group:
■ there is a comprehensive and unifi ed legal organisation at all levels of the Group to provide adequate cover of legal risks,
■ each lawyer is responsible for ensuring that all major risks encountered are escalated within the LEGAL Function,
■ the Practice Group Dispute, a global integrated channel to handle litigation, legal matters in the preliminary stages as well as large- scale investigations. The purpose of this channel is to enable LEGAL to oversee sensitive legal matters on a global scale, to become more proactive and provide a cohesive and consistent response.
TAX RISK In each country where it operates, BNP Paribas is bound by specifi c local tax regulations applicable to companies engaged for example in banking, insurance or fi nancial services.
The Tax Function ensures at a global level that the tax risk is managed throughout all of the transactions conducted by the Group. In view of the fi nancial and reputational stakes, Finance and Compliance are involved in the tax risk monitoring process.
The Group Tax Department carries out the tax function and calls on the assistance of tax managers in certain businesses and in the main geographical areas where the Group operates (as well as tax correspondents in other geographical areas where the Group operates).
In ensuring the coherence of the Group s tax practices and the global tax risk monitoring, the Group Tax Department:
■ has drawn up procedures covering all divisions, designed to ensure that tax risks are identifi ed, addressed and controlled appropriately;
■ has implemented a process of feedback aimed at contributing to the control of local tax risk;
■ reports to Executive Management on tax risk developments;
■ oversees the tax-related operational risks and the internal audit recommendations falling within the Tax Function s scope of responsibility.
A Tax Coordination Committee, involving Finance and Compliance and, on an as-needed basis, the businesses, is tasked with analysing the main tax issues with respect to the transactions the Group performs.
