Balance Sheet at 31 December 2010 of BBVA

D. RISK CONTROL SYSTEMS
D.1. General description of the risk control policy adopted by the Company and/or its Group,
describing and assessing the risks covered by the system and providing a justification for the
adjustment of such system to the profile of each kind of risk.
BBVA believes that excellence in the management of risk is an essential part of its competitive
strategy. The Board of Directors approves the risk management and control policy, and the
periodic monitoring of the internal reporting and control systems. To better carry out its duties, the
Board has the support of the Executive committee and the Risks committee, whose main mission is to
help it pursue its duties related to risk management and control. The functions allocated to it pursuant
to article 36 of the Board Regulations are described in section D3. The general principles guiding the
Group in its definition and monitoring of risk profiles are as follow:
1. The role of Risks is unique, independent and global.
2. The risks accepted must be compatible with the Group's target capital adequacy levels. They
must be identified, measured and valued, with procedures in place for monitoring and management,
as well as sound control mechanisms.
3. All risks must be integrally managed throughout their life cycle, treating different types of risk
differently and actively managing portfolios based on a common measurement (economic capital).
4. The business areas are responsible for proposing and maintaining the risk profile within their
level of accountability and within the framework of the corporate activity (defined as the set of Risks
procedures and policies).
5. The risk infrastructure must be suitable in terms of people, tools, data bases, reporting systems
and procedures. It must facilitate a clear definition of roles and responsibilities, ensuring efficient
allocation of resources between the corporate area and the risks units in the business areas.
On the basis of these principles, the Group has developed a global risk management system
structured in three main blocks:
A corporate risk governance scheme, separating out functions and responsibilities and aligned
with international tendencies and recommendations, adapted to the regulatory requirements of each
country and reflecting the most advanced practices in the markets where the Group operates.
A set of tools, circuits and procedures that incorporate the risk management model into strategic,
tactical and operational decision processes within the Group’s daily operations;
A system of internal controls. The Group's risks system is managed by the Risks Area of the Corporate
Centre, which combines a view of each risk type with a global vision.
The risks function is distributed between the risks units in the business areas and the Corporate Risks
Area. The Corporate Risks Area defines global strategies and policies, while the risks units in the
business areas propose and maintain the risk profile for each customer on an autonomous basis, but
within the corporate framework.
The Corporate Risks Area combines the vision by risk type with a global vision. It comprises the
Corporate Risks Management unit, which covers the different types of risk, the Technical Secretariat
responsible for technical comparisons, along with the transversal units of Structural Management,
Asset Allocation, Technology and Risk Evaluation Methods and Validation Control, which includes
internal control and operational risk. This approach in the risks function ensures firstly the integration,
control and management of all the Group's risks; secondly, application of standardised risk metrics,
policies and principles throughout the entire Group; and thirdly, the necessary knowledge of each
geographical area and each business.
WARNING: The English version is only a translation of the original in Spanish for information purposes. In case of a discrepancy,
the Spanish original prevails.