Safeguarding our customers, employees, information and assets from exposure to criminal risk is an important priority for us. Financial crime risk is the potential for loss or harm resulting from a failure to comply with criminal laws and includes acts by employees or third parties against us and acts by external parties using CWB to engage in unlawful conduct, such as fraud, theft, money laundering, violence, cyber crime, bribery, and corruption. Our Regulatory Compliance team maintains a strong focus on key regulatory compliance areas such as privacy, anti-money laundering, anti-terrorist financing and consumer protection regulations. We govern, oversee and assess principles and procedures designed to help ensure compliance with legal and regulatory requirements and internal risk parameters related to anti-money laundering, anti-terrorist financing and sanctions measures, and our compliance with anti-corruption and anti-bribery laws and regulations.
BUSINESS AND STRATEGIC RISK
Strategic risk is the risk that CWB or particular business areas will make inappropriate business or strategic choices or will be unable to successfully execute processes to achieve our strategic priorities.
Strategic risk includes business risk, which arises from the specific business activities we undertake, and the effects they could have on our financial results. The Board of Directors is responsible for providing oversight of strategic risk and effective challenge and approval of our strategic plan on an annual basis. We develop a strategic plan based on an assessment of emerging market trends, the competitive environment, potential risks and other key issues. Our strategy is focused on targeted growth of our business through a combination of organic growth and strategic acquisitions. The strength of our organic growth depends on the execution of enhancements to our client experience, products, and processes that continues to attract and retain clients. The ability to successfully grow through acquisition will depend on several factors, including identification of accretive new business or acquisition opportunities, negotiation of purchase agreements on satisfactory terms and prices, approval of acquisitions by regulatory authorities, securing satisfactory regulatory capital and financing arrangements, and effective integration of newly acquired operations into the existing business. All these activities may be more difficult to implement or may take longer to execute than we anticipate. To mitigate this risk, we rely on an effective project management process supported by a designated committee comprised of representatives of senior management. SOCIAL AND ENVIRONMENTAL RISK Social and environmental risk is the potential for loss or harm resulting from social or environmental impacts or concerns related to our business or our clients. This risk involves a broad spectrum of issues, including climate change, pollution and waste, energy and other resource usage, human rights, diversity, equity and inclusion, labour standards, and the strength of the communities we operate in. We recognize the importance of social and environmental risk management practices and processes and continue to advance our understanding of the impact these risks may have on our business and the businesses of our clients. Our Board of Directors and its committees provide oversight of these risks and their impacts on our enterprise- wide strategy. We have a cross-functional sustainability team that is responsible to identify and prioritize social and environmental issues based on engagement with our clients, people, and investors, and to develop an implementation plan for our overarching approach to sustainability, which includes social and environmental factors, aligned with our strategic direction. The sustainability team provides regular updates and education on emerging trends related to social and environmental risks and market developments to our Board of Directors. Industry practises related to the identification, assessment and management of social and environmental risk are evolving at a rapid pace, especially those related to climate- related risks, and we continue to monitor and respond to emerging regulatory and supervisory frameworks, guidance, and consultation. Our GRM function is responsible for the ongoing development of policies and processes to identify, assess, monitor, and report on social and environmental risks. Identified social and environmental risks are managed through our business policies and procedures across CWB. Environmental risks within our lending portfolio are managed through our credit granting process (see the Credit Risk section above). Further information on our approach to environmental risks specifically related to climate change are included in the TCFD Disclosure section below. We are committed to providing transparent and timely disclosures related to social and environmental risks to facilitate consistent and comparable reporting across all industries. We publish an annual Sustainability Report, which includes disclosure on our approach and performance to address significant social and environmental risks and reflects our phased adoption of the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, further discussed below. In March 2023, OSFI published Guideline B-15: Climate Risk Management (B-15), which sets out expectations for federally-regulated financial institutions related to the governance and management of climate-related risks. Mandatory climate-related financial disclosures introduced by B-15 are aligned with the TCFD recommendations and our phased adoption supports future compliance with the regulatory guideline. As a small and medium-sized deposit-taking institution (SMSB), as defined by OSFI, we are required to implement B-15 for our fiscal year ending October 31, 2025. As we move forward, we will continue to advance our disclosures as our approach to sustainability matures. Further information on our approach to sustainability is available in our 2022 Sustainability Report, located on our website at www.cwb.com/sustainability-reports.
TCFD Disclosure Governance Board Oversight
The Board of Directors and its committees provide oversight to social and environmental risks and opportunities, including the impact of climate change. The Board of Directors oversees our enterprise-wide approach to climate change and related disclosures included within our Sustainability Report, and monitors progress on the integration of climate factors into our ongoing strategy. As the topic of climate change requires a multidisciplinary approach, each board committee also provides oversight of climate-related factors that are specific to their respective responsibilities. The committee mandates include specific oversight responsibilities related to social and environmental factors. The Board and its committees regularly receive reporting on and discuss a range of climate-related issues, which include our approach to climate change and progress towards measurement of our operational and financed greenhouse gas emissions, current and emerging trends related to climate-related risks, the evolving regulatory landscape, and increased stakeholder focus and engagement.
CWB Financial Group 2023 Annual Report | 55
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