Management model

Risk management in non-banking activities such as asset management, pensions, insurance companies and the real estate business, is organized following the general principles of the relational model between the corporate Global Risk Management (GRM) area and the risk units of each of the business areas.

Among the main objectives of the Non-Banking Risks corporate unit are to establish risk policies and procedures, and to collaborate on the development of methodologies and tools for risk measurement that apply standard techniques to generate outputs that are comparable to the rest of the Group’s risks. The risk units in the business areas are responsible for the implementation of the model, as well as its monitoring and control.

The close relationship between these units and the corporate GRM, together with the definition of their policies and their implementation have ensured rigorous control of risk in a year that has been marked by the sovereign debt crisis in the euro zone.

Economic capital is the standard metric for risk quantification in BBVA Group and the basis for estimates of risk-adjusted return. At the close of 2011, the insurance, pension and asset management (AM) activities are estimated to have an economic capital of €1,214m. Its breakdown by each of these activities is given below.