Deutsche Bank

Annual Report 2017

Operational Risk Exposure

Operational Risk – Risk Profile

Operational Risk Losses by Event Type (Profit and Loss view)

in € m.

2017

20161

1

Changed 2016 loss figures due to subsequent capture of losses and reclassification.

Clients, Products and Business Practices

309

2,512

Internal Fraud

38

397

External Fraud

15

18

Execution, Delivery and Process Management

223

119

Others

30

25

Group

615

3,072

As of December 31, 2017, profit and loss based operational losses decreased by € 2.5 billion or 80 % compared to year-end 2016. The decrease was driven by the event types “Clients, Products and Business Practices” and “Internal Fraud”, due to settlements reached and increased litigation reserves for unsettled cases in 2016.

Operational Losses by Event Type occurred in the period 2017 (2012-2016)1

The above left chart “Frequency of Operational Losses” summarizes Operational Risk events which occurred in 2017 compared to the five-year period 2012-2016 in brackets based on the period in which a loss was first recognized for that event. For example, for a loss event that was first recognized in 2010 with an additional profit/loss event recognized in 2017, the frequency chart would not include the loss event, but the loss distribution chart would include the profit/loss recognized in the respective period.

Frequencies are driven by the event types “External Fraud” with a frequency of 48 % and the event type “Clients, Product and Business Practices” with 40 % of all observed loss events. “Execution, Delivery and Process Management” contributes 9 %. “Others” are stable at 2 %. The event type “Internal Fraud” has a low frequency, resulting in less than 1 % of the loss events in the period 2017.

The above right chart “Distribution of Operational Losses” summarizes Operational Risk loss postings recognized in the profit/loss in 2017 compared to the five-year period 2012-2016. The event type “Clients, Product and Business Practices” dominates the operational loss distribution with a share of 50 % and is determined by outflows related to litigation, investigations and enforcement actions. “Execution, Delivery and Process Management” has the second highest share (36 %) which is related to one large event in 2017. The absolute loss amount of this event type only shows a small increase, but the relative increase is high, given the smaller basis of the total Operational Risk Losses. Finally, the event types “Internal Fraud” (6 %), “Others” (5 %) and “External Fraud” (2 %) are minor, compared to other event types.