Mizuho Bank Europe Annual Report 2018

64 MIZUHO BANK EUROPE N.V. adequately embedding risk management at all organizational levels are important in this respect. Overall, compliance with the Wet op het financieel toezicht (Wft) is an integral component of risk management within MBE. The Wft describes requirements to mitigate financial risks, such as credit risk, interest rate risk, foreign exchange risk, and liquidity risk but also for non-financial risks such as operational risk, IT risk, strategic risk, legal and integrity risk, and reputational risk. Based on the consolidated reporting of Mizuho Bank Ltd. in Japan, MBE is exempt from the DNB’s Pillar 3 public disclosure requirements. However, MBE will provide a Pillar 3 risk profile disclosure to interested parties at their request. Risk Appetite Risk appetite is the core of MBE’s risk governance framework. Risk appetite is the aggregate level and types of risk the bank is willing to assume within its risk capacity, in order to achieve its business strategy and financial strategy. The risk appetite is set in the Risk Appetite Framework and Statement document, which is approved by the Management Board and Supervisory Board of MBE. We express our risk appetite through the Risk Appetite Policy and Risk Appetite Metrics. The Risk Appetite Policy is a qualitative statement articulating the fundamental policy on management, business, financial and risk-taking strategy. Taking into account MBE’s Risk Appetite Policy, the Risk Appetite Metrics define the level or risk that our Management is willing to assume. The Risk Appetite Metrics are set for credit risk, capital strength, liquidity risk, profitability, interest rate risk, operational risk, and reputation risk. In establishing the Risk Appetite Framework, MBE has also adopted Behavioral Guidelines for a Sound Risk Culture, which was established by MHFG to heighten senior management’s and employees’ risk sensitivity and improve their responses and countermeasures in the event of risks. These guidelines provide the foundation for appropriate values and courses of action that should be employed by Mizuho’s senior management and employees when approaching risks. We have embedded these guidelines in the foundation of our risk appetite framework. Risk Organization We base the structure of our RMF on the three lines of defense principle. Assigned to the first line are the commercial and operational departments and concerns day-to-day responsibility for risk control. Risk Management, Compliance, and Finance & Control comprise the second line and are responsible for initiating risk policies and supervision of risk control. Internal Audit forms the third line and is responsible for performing independent audits on the RMF. The Management Board and the Supervisory Board supervise the risks and capital adequacy requirements in relation to MBE’s operations. For this purpose, two committees are in place. The quarterly Risk Committee assesses all risks identified relating to MBE’s business activities. Secondly, the Risk Committee of the Supervisory Board is in place to advise the Supervisory Board on financial reporting, liquidity risk, capital management, internal and external audits, as well as on compliance matters and duty of care. The Management Board, together with the Supervisory Board, bears the ultimate responsibility for MBE’s RMF. The Management Board and Supervisory Board review and approve this framework annually.