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Risk management
ment, which is responsible for ex post control,
the number of effective employees dropped by
15%.
The total staff in the three departments
rose at the four large banks from 978 in 2008
to 1,178 in 2011, an increase of 21%. These fig-
ures show that the institutions have chosen in
full awareness to place more focus on preven-
tion instead of control after the facts and that
they are heavily investing in it.
What is risky behaviour?
The definition of risky behaviour is not always
easy to determine. Which policy can be de-
scribed as risky and which not? Before 2007,
the illusion existed that zero risk was possible,
for loans to governmental bodies for instance.
The events of the past few years, however, have
shown that investments that were described as
safe and non-risk can also carry a risk.
RETURN TARGET BASED ON ROE
(
SOURCE: FEBELFIN)
0.6% 3.9%
3.3%
24.7%
13.8%
Between 5% and 8%
Between 8% and 10%
Between 10% and 12%
Between 12% and 14%
Between 14% and 16%
16%
and more
Not applicable
0.1%
53.7%
Survey bank members May 2012
Due to the financial crisis, the financial insti-
tutions are paying more attention to the qual-
ity of their risk management to prevent the
same problems from occurring again.
More than half of the sector (54% or 7 of the
19
surveyed institutions) no longer sets tar-
gets based on Return on Equity, and 38% (6
of the 19 surveyed institutions) sets targets
of over 12%. This target is strongly dictated
by the international character of the Belgian
financial sector. 82% of the institutions have
their headquarters abroad and therefore feel
more pressure from the financial markets and
their foreign shareholders to achieve a higher
return. It is obvious that the higher the return
target, the higher the likelihood that more risk
will be taken to achieve this return.