Legal Risk

The Institution establishes and maintains an internal control environment that reasonably ensures that activities are governed within the applicable Regulatory Framework and, before the execution of legal acts, their legal validity and adequate legal instrumentation are analyzed.

For Legal Risk management, the Expected Loss is used to estimate potential loss derived from unfavorable judicial or administrative resolutions. The preceding allow for progressive reserves depending on the procedural stage of each trial and the corresponding resolution by the Judicial Instance. It is monitored and reported monthly:

The proceedings carried out by the Legal Area for the ten prominent undergoing lawsuits having the highest reserves.
The Lawsuit Coverage rate.
The Concentration of Litigation by Geographic Area.
The concentration of current lawsuits attended by External Attorneys.

As of December 2020, the Legal Risk is at a Low-Risk Level considering that the reserves are sufficient to cover the amounts of legal contingencies resulting from judicial or administrative decisions unfavorable to the Institution depending on their procedural stage and possibilities of losing the suit.