AmazonScience/document-haystack

1The objective of model risk management is to identify, measure and mitigate model risk. This 2is achieved by:3– Maintaining a robust model risk management and framework, including policies and key 4operating procedures with clear roles and responsibilities for key stakeholders across the 5model risk life cycle6– Assessing and monitoring the model control environment7– Maintaining model inventory to a high degree of integrity8– Supporting ongoing model risk assessments9– Performing independent model validations providing effective review and challenge to the 10model development and the appropriateness of model use11– Establishing model risk appetite and reporting standards to provide all key stakeholders 12with a timely and comprehensive view of model risk with actionable information 13– Ensuring the model risk framework aligns to industry best practice and regulatory 14expectations15Sustainability Risk and Adverse Impacts to the Environment and 16Society17IFR Article 5318Sustainability risk is the potential negative impact to the value of an investment from 19sustainability factors. Sustainability factors are ESG events or conditions, including physical 20and transitional climate factors. Sustainability risks, including climate risks, can impact all 21three main areas of our risk management and control framework: non-financial risks, financial 22risks and fiduciary investment risks. Adverse impacts to the environment or society are 23defined as negative, material or potentially material effects on sustainability factors that are 24directly related to actions made by our Group, our employees, investee companies within our 25portfolios or other related stakeholders. This is also referred to as the concept of “double 26materiality”, which aims to describe the fact that sustainability factors are connected to two 27dimensions of materiality: “Financial materiality” describes the ESG-related financial and non-28financial risks, whereas “non-financial materiality” describes adverse impacts to the 29environment or society.30To ensure effective sustainability risk identification and assessment, we have classified the 31impact of the identified sustainability factors under “ESG risk themes”, aggregating patterns 32of impact related to sustainability factors. ESG risk themes can be grouped into33– Adverse impacts34– Sustainability risk materializing as non-financial risks35– Sustainability risk materializing as strategic and financial risks36– Sustainability risk materializing as investment risks37To identify the existing risk types where sustainability factors, including climate factors, are a 38risk driver, in 2023 we performed a scenario-based risk assessment. During this assessment, 39the respective owners of key sustainability activities within the first line of defence evaluated 40the inherent risk of ESG related risk scenarios, and, where relevant, documented controls to 41reduce that risk to an acceptable level. Using this evaluation as an input, we reviewed existing 42risk types for both portfolio and corporate risks and determined whether sustainability factors 43may potentially be relevant risk factors. A first set of adverse impact types was added as an 44add-on to the risk taxonomy.45We aim to consider adverse impacts going forward as an additional risk dimension next to 46corporate (financial and non-financial) and investment (fiduciary) risks. National or regional 47regulations as well as existing contractual relationships may supersede the consideration of 48adverse impact for certain regions or asset classes.49The policy on ESG Integration in the Risk Management Framework (formerly titled 50Sustainability Risk Management Policy) describes how sustainability risks, including climate 51risks, and adverse impacts are integrated into our risk management framework. In 2023, we 52revised the policy in particular by amending the consideration of adverse impacts on the 53environment and society. This policy outlines sustainability risk and adverse impact-related 54definitions, how sustainability factors interact with the risk taxonomy and the risk assessment 55grid, as well as roles and responsibilities for the management of sustainability risk and 56adverse impacts.57For each group of ESG risk themes, the business and risk strategy as well as the risk appetite 58statement give guidance to the management of sustainability risk and adverse impacts. Four 59qualitative statements have been included in the risk appetite statement, one for each group 60of ESG risk themes mentioned above. They define the tone from the top for ESG related risk 61taking within our organization. Quantitative indicators have been defined related to each 62group of ESG risk themes. 63        64To our Shareholders Summarised 65Management Report66Consolidated 67Financial Statements Compensation Report Corporate Govern-68ance Statement69Supplementary 70Information DWS 2023 Annual Report71 72Risk Report7349 Risk Framework74The secret object #1 is a "table".