III. Risk report

1. RISK MANAGEMENT SYSTEM

1.1. OBJECTIVE AND LIMITATIONS

The systematic controlled assumption of risk in relation to target returns is an integral part of corporate control in the DZ BANK Group. The operating activities resulting from DZ BANK Group’s business model require the ability to identify, measure, assess, manage, monitor, and communicate risks. The backing of risks with adequate capital is also recognized as an essential prerequisite for the operation of the business and is of fundamental importance. In all its activities, the DZ BANK Group therefore abides by the principle of only taking on risk to the extent absolutely necessary to achieve business objectives.

Against this background, the Board of Managing Directors of DZ BANK has established an appropriate and fully functioning risk management system that meets both the group’s own business management requirements and statutory requirements. Given the methods that it has implemented, the organizational arrangements and IT systems that it has put in place, DZ BANK and the DZ BANK Group companies are in a position to identify material risks at an early stage and to initiate appropriate control measures, both at the group level and at the level of the individual group companies. The risk management system is subject to regular review by risk control and internal audit. In addition, the Supervisory Board of DZ BANK satisfies itself at regular intervals that the risk management system is appropriate and functioning properly.

Regardless of the fundamental suitability of the risk management system, it is conceivable that there may be circumstances in which risks cannot be identified in good time or in which a comprehensive, appropriate response to risks is not possible. The methods used for the measurement of risk are integrated into the groupwide risk management system. The risk model calculations are suitable for the management of the DZ BANK Group and the companies concerned. Despite careful development of models and regular reviews, situations may arise in which actual losses or liquidity requirements are higher than those forecast in the risk models and stress scenarios.

 
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DZ BANK Group