Treasury and Risk Management
At Credit Suisse, we conservatively manage our liquidity and funding position, and we strive for a strong capital position. One of our financial targets is a BIS tier 1 ratio under Basle II of 12.5%. In our annual and quarterly reports we provide detailed information related to our treasury, capital and risk management activities, including detailed quantitative information on relevant capital and risk trends. Our client focused business model generally mitigates risks and limits exposures, while the integrated business mix of Private Banking & Wealth Management and Investment Banking provides a certain amount of natural risk diversification.
Liquidity and Funding
Funding, liquidity, capital and foreign exchange exposures are managed on a centralized basis through Global Treasury. Oversight of these activities is provided by the Capital Allocation and Risk Management Committee (PDF) (CARMC), a committee that includes the CEO’s of the Group and the divisions, the CFO, the CRO’s of the Group an the Bank, the COO and the Global Treasurer. It is CARMC's responsibility to review the capital situation, balance sheet development, current and prospective funding and foreign exchange exposures and to define and monitor adherence to internal Treasury risk limits.
Our liquidity and funding policy is designed to ensure that funding is available to meet all obligations in times of stress. We have access to multiple markets worldwide and we use a wide range of products and currencies to ensure that our funding is efficient and well diversified across markets and investor types. Unsecured funding sources include private and corporate and retail banking client deposits, long-term debt, certificates of deposit, bank deposits, fiduciary deposits, central bank deposits and other non-bank deposits. Under Information for bondholders we provide further information on our issuance activities, including credit ratings and reports.
The taking of risk (PDF) in line with our strategic priorities is fundamental to our business as a leading global bank. We use economic capital (PDF) as our consistent and comprehensive tool for risk management, capital management and planning and performance measurement. It provides us with a robust framework for managing our risk on a consolidated basis and for the assessment of an aggregate risk appetite in relation to our financial resources. A key element is our sound system of risk limits which define our maximum on- and off-balance sheet exposures. We also consider other factors (for example strategy, reputation, economic and competitive environment) that are outside the economic capital framework. We use the concept of value-at-risk (PDF) to measure our market risk as potential changes in fair values of financial instruments in response to market movements. Scenario analyses are regularly performed for all our assets exposed to market and specific risks to estimate the potential economic loss that could arise from extreme, but plausible, stress events. In addition to these portfolio risk tools (PDF), we use a range of detailed specific risk tools.
Risk Governance and Organization
We have established and continuously strengthen our risk function, which is independent of, but closely interacts with, the sales and trading functions. The primary objectives are to protect our financial strength and reputation, while ensuring that capital is well deployed to support business activities and grow shareholder value. Our risk management framework is based on transparency, management accountability and independent oversight. As a consequence of the complexity of the relevant risks, we have defined our risk perspective broadly. Our key risk management bodies and committees (PDF) reflect the specific nature of the various risks in order to ensure that risks are managed within limits set in a transparent and timely manner. Further relevant information related to our overall policies and procedures is provided under governance.