Supplemental reporting
Table of Contents
Maintain a foundation of trust
Obsessed with your success
Manage our impact responsibly
Overview
Appendices
RISK MANAGEMENT
E
CWB’s strategic growth objectives Our Risk Management framework Our Risk Management framework is developed and maintained by our GRM team, and encompasses risk culture, risk governance, risk appetite, and risk management policies, processes and tools. Our framework guides us in prudent and measured risk- taking aligned with our strategic objectives, which include an effective balance of risk and reward. We actively evaluate existing and potential risks to develop, implement and continually enhance appropriate risk mitigation strategies.
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CWB’s Risk Culture
Refer to pages 44 – 59 of our 2022 Annual Report to learn more about our Risk Management framework.
Integrating climate risk Climate risk is a subset of environmental risk that
As noted in the Strategy section, a key priority for 2023 is the development of an industry-level heatmap assessment to identify the physical and transition impacts of climate change within our lending portfolios. We will leverage the heatmap to support our identification and understanding of inherent physical and transition risks within our lending portfolios, which will facilitate the development of our climate risk appetite. The integration of climate risk into our Risk Management framework is a complex, multi-year undertaking. The steps we have taken in 2022 to initiate the integration of climate risk into our Risk Management framework are foundational, however, we recognize we have further work ahead to advance our ability to identify, assess, monitor and report on the direct and indirect impacts of climate risk. Identifying, assessing and managing climate risks Climate risks continue to evolve and emerge driven by Canada’s commitment to transition to net-zero emissions by 2050 and the physical risks associated with severe weather events, which could result in a broad range of impacts on our business or the businesses of our clients. In addition to the potential for elevated credit, operational and strategic risks driven by climate factors, legal, regulatory or reputation risks could also arise from our and our clients’ planned approach to address climate change. In 2022, we recognized climate risk as a top emerged and emerging risk.
encompasses the risk of financial loss or reputational damage that results from the physical and transition impacts of climate change, which may adversely impact our operations, or the operations of our clients. • Transition to a lower-carbon economy may entail extensive policy, legal, technology, and market changes to address mitigation and adaptation requirements related to climate change. Depending on the nature, speed, and focus of these changes, transition risks may pose varying levels of financial and reputation risk to organizations over time. • Physical risks related to climate change can be event-driven or due to longer-term shifts in climate patterns. Physical risks may have financial implications for organizations, such as direct damage to assets and indirect impacts from supply chain disruption. We are working with internal and external partners to integrate climate risk into our Risk Management framework and enhance our capabilities to measure, manage, monitor and mitigate its impacts. In 2022, we updated our Risk Management framework to incorporate social and environmental risk into our risk universe and climate risk was added to our Risk Register to facilitate the assessment of the level of inherent risk, control effectiveness and residual risk.
61 2022 SUSTAINABILITY REPORT AND PUBLIC ACCOUNTABILITY STATEMENT
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