Enterprise Risk Management at ING Group

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Excerpts

ING had put in place comprehensive risk management procedures at all levels within the Group. At the Executive Board level, the Risk Policy Committee evaluated and managed the Group's overall risk profile, aiming for the right balance between risk, return and capital...

Credit risk was the risk of loss due to default by a debtor or counterparty. Credit risk arose in lending, investment and trading activities. ING's credit risk management was supported by general information systems and debtor and counterparty internal rating methodologies. ING's internal risk rating models had been converted from a ten-risk class scale to a twenty-two risk class scale to meet the future requirements of the new Basel II capital accord. The banking credit portfolio was constantly reviewed. A formal analysis took place on a quarterly basis to determine the provisions for possible bad debts...

Country risk was the risk that ING faced due to events in a specific country or group of countries. Country risk arose in various lending, trading and investment activities. Many transactions and trading positions generated by ING Bank had a country risk. Country risk was further divided into economic and transfer risk. Economic risk was the risk relating to any event in the risk country that might affect transactions and other exposure in that country, regardless of the currency...

ING closely monitored its liquidity risk to maintain an adequate cushion to meet its financial liabilities when due. Liquidity risk was managed at Group and local level by a combination of existing investment mandates, guidelines for asset and liability management, specific limits for certain business units and treasury policies and procedures...

ING's policy was to manage operational risks through clear governance, an embedded operational risk management function, and the implementation of comprehensive operational risk identification, measurement, monitoring and mitigation processes. All business managers were responsible for establishing specific internal policies, procedures and controls and for continuously monitoring and controlling operational risks...

Exhibit I: ING Bank Risk Classes
Exhibit II: ING Group Additions to the Provision for Loan Losses (Based on Risk Country)
Exhibit III: ING Group Lending By Geographical Area
Exhibit IV: Economic Exposure by Country
Exhibit V: Largest Cross-Border Lending Exposures in Emerging Markets
Exhibit VI: ING Group Value at Risk by Category
Exhibit VII: ING Group Client Concentration
Exhibit VIII: ING Group Operational Income by Geographical Area
Exhibit IX: ING Group Geographical Distribution of Gross Premium Income
Exhibit X: ING Group Share Price Movement
Exhibit XI: ING Group Ten year Financial Highlights
Exhibit XII: ING Group Operations Result