Financial Statements

OPERATIONAL RISK

Operational Risk is defined as the possibility of occurrence of losses resulting from failure, deficiency or inadequacy of internal processes, people and systems, or from external events. This definition also includes legal risks, associated with the inadequacy or deficiency in contracts signed by the financial institution, as well as penalties due to noncompliance with legal provisions and compensation for damages for third parties, resulting from the activities developed by the institution itself.
The Confidence Group’s Operational Risk management structure provides for the identification, evaluation, monitoring, control and action plans for the mitigation of operational risks.
The Confidence Group has established in its Operational Risk Management Policy the roles and responsibilities of the Group’s relationship areas, as well as the commitment to the immediate correction of identified risks.
The Operational Risk Management and Control Methodology adopted by the Confidence Group aims to ensure that:

  • The control structure is continuously reviewed, considering the risks in the business processes, minimizing costs associated with uncontrolled risks and/or unnecessary control activities;
  • The objectives of the risk management process and the roles, functions and responsibilities assigned to the various levels of the institution are understood by all employees;
  • The areas understand the role, objectives, functions and responsibilities of the Risks and Internal Controls area, as independent control tools created within the Institution; and
  • The Confidence Group’s strategic objectives are met.

MARKET RISK

A market risk is the possibility of occurrence of losses resulting from fluctuation in the market values ​​of positions held by the Confidence Group. The main market risks to which the Confidence Group is exposed are:

Foreign exchange risks

Risks in assets and liabilities referenced in foreign currencies, the main focus of the trading carried out by the Confidence Group, are determined in accordance with BACEN Circular 3,389.

Pre-interest

For assets and liabilities exposed to the risk of pre-fixed interest rates, the risk calculations are made in accordance with the instructions contained in BACEN Circular 3,361 and Circular Letter 3,309.

Exchange rate coupon

For assets and liabilities exposed to currency coupon risk, in which there is a pre-fixed risk portion in combination with the risks arising from changes in the price of currencies, the calculation is performed based on BACEN Circular 3,362.

Inflation coupon

Assets and liabilities exposed to inflation coupon risk are calculated in accordance with BACEN Circular 3,363.

Interest coupon

Assets and liabilities exposed to interest coupon risk are calculated in accordance with BACEN Circular 3,364.

Share risk

The risks of assets and liabilities consisting of stocks or derivative financial instruments, whose underlying assets are stocks, are determined in accordance with BACEN Circular 3,366.

Commodity risk

The risks of assets and liabilities consisting of derivative financial instruments, which are traded on the Futures market of BMF&Bovespa, are not traded by the Confidence Group. Nevertheless, in the event that it operates its own portfolio in the future in such derivatives , it will determine the risks to which it will be exposed, according to BACEN Circular Letter 3,309.

SOCIAL AND ENVIRONMENTAL RISK

Socioenvironmental risk is the possibility of occurrence of losses resulting from socioenvironmental damages.

PRSA - Política de Responsabilidade Socioambiental
PRSA - Política de Responsabilidade Socioambiental
prsa-politica-de-responsabilidade-socioambiental.pdf
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LIQUIDITY RISK

It is the occurrence of imbalances between negotiable assets and obligatory liabilities – “gaps” between payments and receipts – that may affect the Confidence Group’s ability to make payments, considering the different currencies and settlement periods of its rights and obligations.

 

RISK MANAGEMENT REPORT

Circular 3477 - Março 2012
Circular 3477 - Março 2012
Circular_3477_2012-03.pdf
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Circular 3477 - Dezembro 2011
Circular 3477 - Dezembro 2011
Circular_3477_2011-12.pdf
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