CWBFG Annual Report 2023

Non-Financial Risk Committee - Reviews the operational risk management framework and, operational loss reporting and business continuity plans. Reviews action plans for mitigating and improving the management of non-financial risks including regulatory compliance, cybersecurity and third-party risks, as well as assessments of applicable regulatory developments; Model Risk Committee - Develop and oversee CWB’s model risk management framework to ensure compliance with regulatory requirements or established model risk policies. All models are required to be approved by the model risk committee prior to deployment; Group Forecasting Committee - Develops an enterprise-wide view of the economic outlook to support expected credit losses and the development of ad hoc stress testing scenarios; and Group Asset Liability Committee (ALCo) - Reviews and approves operational guidelines and programs for liquidity management, funding sources, investments, foreign exchange risk, interest rate risk and derivative risk. The following oversight functions provide key support within the Risk Management framework: • Risk Management - The Chief Risk Officer (CRO), who reports functionally to the Board Risk Committee, leads a diverse team of risk management professionals organized to provide independent oversight of risk management, risk governance and control. As the second line of defence, the mandate of the GRM function is to provide independent oversight of risk-taking decisions, independent assessment of risk and effective challenge to the business. This function establishes the Risk Management framework to identify, measure, aggregate and report on all material risks managed by the first line within our three lines of defence framework. This includes oversight of risk governance policies, establishment of risk appetites and key risk metrics, and development of risk infrastructure, including risk management processes and tools. The risk management function supports a disciplined approach to risk-taking in fulfilling its responsibilities for transactional approval and portfolio management, risk reporting, stress testing, modelling and risk education. • Finance - The CFO, who reports functionally to the Audit Committee, leads a team responsible for the development of financial strategies that support our ability to maximize sustainable shareholder value, and the production of reliable and timely reporting of financial information to management, the Board of Directors, shareholders, regulators, and other stakeholders. The team provides independent oversight of processes to manage financial reporting, external credit ratings, certain regulatory reporting and tax. • Legal, Compliance and Investigations - Provides second line oversight of legal, regulatory compliance, financial crime (including fraud, corruption and bribery, and anti- money laundering risks) and reputation risks with established and maintained policies, and standards used by the first and second lines of defence to identify, measure, mitigate and report on significant risks. • Internal Audit - Reporting directly to the Audit Committee, internal audit is the third line of defence in the Risk Management framework, responsible to provide management and the Board of Directors with objective, independent assurance as well as advice on the effectiveness and efficiency of governance, risk management, and internal control processes and systems. • Human Resources - Provides second line oversight of people risks across the organization by establishing and maintaining relevant policies, frameworks and standards related to workforce practices and safety. RISK APPETITE The purpose of the Risk Appetite framework is to define the type and amount of risk we are willing to assume through our business activities, while considering the priorities of all stakeholders. Risk appetites for key risk types are established based on both quantitative and qualitative factors by GRM and other corporate functions, as the second line, endorsed by senior management and approved by the Board of Directors. Key components of our Risk Appetite framework include: • Risk Appetite Statement - an outline of the aggregate levels and types of risk we are willing to accept to achieve our business objectives. • Risk Capacity - The maximum level of risk we can assume before it breaches regulatory constraints determined by regulatory capital, liquidity needs, the operational environment and its obligations to customers and other stakeholders; • Risk Appetite - The level and type of risk CWB is willing to accept, or seeks to avoid, to achieve our business objectives, while considering the priorities of all stakeholders. Risk appetite must be set at a level within the risk capacity limit; and, • Risk Limits - Represents the allocation of CWB’s Risk Appetite Statement to specific risk categories, to business units, to lines of business at the portfolio or product level, and to other levels, as appropriate.

Key attributes of our overall risk appetite include the following:

• An appropriately conservative risk culture that is prevalent throughout CWB;

• A philosophy to only take risks that are aligned with our Strategic direction and are expected to create sustainable, long-term value for stakeholders;

• A philosophy to only take risks that are transparent and understood, and that can be measured, monitored and managed;

• Careful and diligent management of risks at all levels led by a knowledgeable and experienced leadership team committed to sound management practices and the promotion of a highly ethical culture;

• Targeted financial and operational performance which supports maintenance of our credit ratings to allow for competitive access to funding;

• Maintenance of effective policies, standards, protocols, directives and procedures/controls, with training and oversight to guide the business practices and risk-taking activities of all employees in support of CWB’s reputation and adherence to all legal and regulatory obligations; and, • Risk Appetites for key risk types are established based on both quantitative and qualitative risk type metrics by Second Line functions, endorsed by senior management, and ultimately approved by the Board and its committees.

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