BBVA in 2012

Risk management innon-banking activitiesInsurance and fund administrationactivitiesThe risk functions in the insurance and mutual and pension fund administration activitiesare integrated into the Retail Banking GRM unit in order to assist the business in managingits risks, while supporting its strategy and development. Therefore, Retail Banking GRMcentralizes the management of these risks through the Insurance & Prevision and AssetManagement & Fiduciary Risk corporate units, whose main task is to establish the risk strategyfor these activities.Management of these risks is carried out according to the general principles of GRM: unique,independent and global function following the relationship model between the corporate areaand the risk units of the business areas. Therefore, Insurance & Prevision and Asset Management& Fiduciary Risk are global risk units responsible for determining the risk policies, methodologiesand tools. They also monitor risks in close cooperation with the business units, with whom theycollaborate and coordinate risk-related activities. The risk units of the business areas develop theprocedures aligned with the established corporate policies, but adapted to the specific nature ofthe local markets and the characteristics of their own activity. They also execute the processes andcontrols needed to verify their implementation and the effectiveness in mitigating and controllingthe risks.Economic capital is the standard metric for estimating risk in BBVA Group and the basis forcalculating attributable profit and risk-adjusted return.The economic capital of the insurance activity in 2012 stood at €913m. Of this amount, credit riskaccounts for 44%, market risk for 25% and technical risk for 24%.44Insurance companies. Economic capital breakdown by type of risk(31-12-2012)Technical 24%Rest 1%Credit 44%Operational 6%Market 25%Total economic capital: 913 million euros126 Risk management