2007 REGISTRATION DOCUMENT

RISK MANAGEMENT3Risk mitigation techniques< Contents >INSURANCE SUBSCRIPTION RISKS(See section 5.5 Financial statements – note 4.a. – Insurance risks.)13.4 Risk mitigation techniquesCREDIT AND C OUNTERPARTY R ISK23COLLATERAL AND OTHER SECURITY(See section 5.5 Financial statements – note 4.a. – Credit risk.)NETTING AGREEMENTS(See section 5.5 Financial statements – note 4.a. – Credit risk.)PURCHASES OF CREDIT PROTECTION(See section 5.5 Financial statements – note 4.a. – Credit risk.)45MARKET R ISK6Trading activities involve building up hedging relationships between different financial instruments. The residual market risk position on these instrumentswill be reflected in the VaR model.7OPERATIONAL R ISKINSURANCE POLICIESRisks incurred by the Group may be covered by major insurers with thedual aim of protecting its balance sheet and profit and loss account.The Group’s risk management policy is based on an in-depth identificationof risks underpinned by detailed operating loss data. The risks identifiedare then mapped and partially transferred to leading insurers in themarket.The Group’s purchases insurance against fraud, theft, property andcasualty, business disruption, liability and other risks for which it maybe held responsible.In order to optimise costs and effectively manage risks, certain riskswhose frequency and financial impact can be adequately estimatedare self-insured.Risks insured on the market include:■ property and contents damage (resulting from a fire, explosion, etc),taking into account replacement cost (approved by the Group’sinsurers following risk assessment visits to key sites);■ fraud and misappropriation of assets;■ business disruption (loss of net banking income or revenues, additionalcosts, etc.);■ theft of Bank or customer valuables on company premises and fromsafes;■ corporate liability;■ liability of corporate officers in the event of errors, omissions orprofessional misconduct;■ business liability (for example, personal injury, property damage orconsequential loss caused to a third party);■ terrorist attacks.8910112007 Registration document - BNP PARIBAS 83