ING Direct 2015 Annual Report Download - page 157

Contents
Who we are
Report of the
Management
Board
Corporate
Governance
Consolidated
annual accounts
Parent company
annual accounts
Other
information
Additional
information
Notes to the Consolidated annual accounts of ING Bank - continued
Process
The ING Bank risk appetite framework (RAF) consists of specific risk appetite statements. The RAF is approved by SB on an annual basis,
or more frequently if necessary based on their quarterly review in MBB and SB. The bank risk appetite process is focused on setting the
appetite at the consolidated Bank level and across the different risk categories. It is therefore essentially a top-down process, which
bases itself on the ambition of the Bank in terms of its risk profile and is a function of the capital and liquidity levels and ambitions, the
regulatory environment and the economic context. The process is set up according to the following steps:
Step 1. Identify & assess ING Bank’s key risks
Setting the Risk Appetite Framework starts with a multi-dimensional step to identify & assess the risks ING Bank is facing when
executing its strategy. This step includes the following actions that are performed on an annual basis:
• detect unidentified risks that are not yet controlled within ING Bank’s risk management function & assess their potential impact,
• benchmark current risk framework versus regulatory developments,
• re-assess known risks to confirm risk level or detect potential changes,
• reflect on the current set of Risk Appetite Statements.
This annual Risk Assessment serves as input when defining the global risk appetite which - in line with its business model and risk
ambition - is currently formulated as follows:
ING Bank has the ambition to be and remain a strong bank, and able to address possible adverse events on its own strengths and
resources.
In order to achieve this risk ambition, ING Bank has the following targets:
• Have a rating ambition which is in line with the strongest among its peer group;
• Be able to restore capital and liquidity position following a stress situation on its own strength;
• Be in a position to meet current and forthcoming regulatory constraints and targets; and
• Have a risk profile that compares favourably to its main banking peers.
Step 2. Set ING Bank Risk Appetite Framework
Based on ING Bank’s risk assessment and risk ambition, specific targets are set for both financial and non-financial risks:
Financial risk
For financial risks, ING Bank expresses its risk appetite as a tolerance allowed to key ratios deviating from their target levels. Therefore,
the high level risk ambition is translated into quantitative targets on ING Bank level for solvency risk, liquidity & funding risk and for
concentration and event risk.
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