Company: BBD
Filing Date: 2025-03-31
Form Type: 20-F
Source: 0001292814-25-001244
Chunk: 429

Company: BANK BRADESCO
Filing Date: 2025-03-31
Form: 20-F
Item: Item 19
Chunk 429
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 various levels, management initiatives may include sales of investments, altered portfolio allocations,
and other protective measures.

Other limitations of the sensitivity analyses
include the use of hypothetical market movements to show the potential risk, which only represents Management’s view of possible
market changes in the near future, which cannot be foreseen with certainty, and they also assume that all interest rates move in the same
manner.

Credit risk

Credit risk consists of the possible occur
of losses in value of financial assets and reinsurance assets, because of noncompliance, by the counterparty, of its financial obligations
according to agreed terms the Company and its subsidiaries, as well as the devaluation of contracts, resulting from the deterioration
in the counterparty's risk classification.

This risk may materialize in different
ways, among others.

  Losses arising from delinquency, due to lack                             

  Possibility of any issuer of financial asset                                                 

  Inability or unfeasibility of recovery of commissions  

Credit risk management

The Company performs various sensitivity
analyses and stress tests as tools for management of financial risks. The results of these analyses are used for risk mitigation and to
understand the impact on the results and the shareholders’ equity of the Company in normal conditions and in conditions of stress.
These tests take into account historical scenarios and scenarios of market conditions provisioned for future periods, and their results
are used in the process of planning and decision making, as well as the identification of specific risks arising on financial assets and
liabilities held by the Company. The management of credit risk for reinsurance operations includes monitoring of exposures to credit risk
of individual counterparts in relation to credit ratings by risk assessment companies, such as AM Best, Fitch Ratings and Standard &
Poor’s and Moody’s. The reinsurers are subject to a process of analysis of credit risk on an ongoing basis to ensure that
the goals of the mitigation of credit risk will be achieved.

In that sense, credit risk management
in the Company is a continuous and evolving process including the mapping, development, evaluation and diagnosis of existing models, instruments
and procedures that requires a high level of discipline and control in the analysis of operations to preserve the integrity and independence
of processes. It is a process carried out at the corporate level using structured, independent internal procedures based on proprietary
documentation and reports, assessed by the risk management structures of the Company and Banco Bradesco, and based on the gradual deployment
of internal models for the determination, measurement and calculation of capital.