Further information
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3. Risk management
strategy. Working with the ES&B, the CSO is responsible for monitoring these risks and ensuring that they are managed appropriately at regional and global level and that the necessary investment is assigned to programmes that mitigate risk and capture opportunities. Integrated into our global risk management Our approach to managing climate- related risks is integrated into the Firm’s global risk management process, which encompasses all potential risks, practice groups, sectors, jurisdictions, and locations in which we operate. This global risk management programme is directed by the ARC in conjunction with our risk management partner, Barnett Waddingham, with oversight from the Management Board. The ARC has identified the Firm’s 12 principal risks through an extensive engagement process and maintains a global risk register. A risk owner is assigned to each of the 12 risks, with the CSO responsible for climate and ESG-related risks. The ARC and the Board receive reports on a quarterly basis.
Financial and strategic impact are averaged across four categories: • Profitability & Liquidity • People & Wellbeing • Reputational & Clients • Operations which, in turn, are averaged into one impact score. This score is then reviewed alongside stakeholder comments with amendments are made to the impact ratings as needed. The impact and time horizon for each risk – and subsequently for each opportunity – are then plotted on a heatmap graph. The highest-ranking risks have been prioritised for scenario analysis. Risks that are not highly rated but considered strategically important for scenario analysis have been added to the prioritised risk group by exception. These risks are then modelled qualitatively through climate scenario analysis to understand their impact on the business. The outcome of this scenario analysis will inform how we will manage these risks and opportunities. The process starts by assessing the current resilience of our
Next Steps • Deepen engagement on our initial climate-related risk findings and continue to integrate management
Identifying, assessing and managing climate-related risk We have a rigorous process to identify and assess climate-related risks and opportunities and intend to make this an annual requirement. Starting with a long list of potential risks and opportunities, we use key stakeholder input to rank these within defined time horizons, using our impact and likelihood matrix. • Describe the organisation’s processes for identifying and assessing climate- related risks • Describe the organisation’s processes for managing climate-related risks • Describe how processes for identifying, assessing, and managing climate- related risks are integrated into the organisation’s overall risk management
of climate-related risks and opportunities into Firm’s risk management processes
• Continue to align with TCFD, reviewing the climate-related risk materiality assessment annually, managing climate-related risks, building climate resilience into business strategies, and disclosing management of climate-related risks and opportunities • Align to Taskforce on Nature- Related Financial Disclosure (TNFD). As nature-related risks and interdependencies with climate-related risk are increasingly recognised as areas of risk for businesses we have accepted an invitation from the TNFD Forum to influence the evolution of the TNFD framework.
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