Environmental & Social Risk Management

According to Rule 8-2010 and its amendments, banks must identify, measure, monitor, control, mitigate, and report to the operational areas within the bank, the different types of risks to which it is exposed, in accordance with the size and sophistication of its operations, products and services.

Among the types of risks to be managed, Rule 8-2010 and its amendments include Environmental and Social Risk, defined as the possibility that a bank may incur in losses due to negative social and environmental effects triggered by granting loans for project financing, as well as by activities originating from the environment where the bank runs its operations, significantly affecting the economic, social or environmental system.

In accordance with Corporate Governance standards set forth in Rule 5-2011 and its amendments, banks are reminded of their duty to manage the risks the bank faces, among which we can highlight social and environmental risk, through a suitable structure that allows fostering a culture of administration and a flow of information within the bank’s structure, which is commensurate and suitable to the size and sophistication of its operations and services.

In compliance with this obligation, banks may freely assign within their structure, roles and responsibilities for meeting the objectives, procedures and controls for environmental and social risk management, provided that they do not assign to the same area within the structure, functions that are incompatible with each other or that generate conflicts of interest.