AmazonScience/document-haystack

1The regulatory and legal implications of digitalization remain uncertain, for instance 2concerning customer protection, financial stability and the financial supervision of existing 3and new market participants. Regulators are also faced with reacting to new, ethical 4considerations. With increasing levels of digitalization, cyber-attacks could lead to technology 5failures, security breaches, unauthorized access, loss or destruction of data or unavailability of 6services. We expect our businesses to have an increased need for investment in digital 7infrastructure, products and process resources to mitigate the risk of a potential loss of 8market share. 9This risk may adversely impact our medium-term targets. Any of these events could involve 10litigation or cause us to suffer financial loss, disruption of our business activities, liability to 11our clients, government and/or regulatory intervention or sanction, or damage to our 12reputation. 13Sustainability14Opportunities15In 2023, investors continued to allocate capital into ESG and sustainable funds, which have 16shown relative resilience against a challenging market environment. This continued high 17client demand – arising from climate change and specifically the transition to a low-carbon 18economy: demanding climate and specifically climate transition related strategies represents 19an opportunity for asset managers. As investors become more aware of sustainability risks 20and opportunities as well as the adverse environmental and social impacts associated with 21their investments, asset managers are increasingly asked to incorporate sustainability factors 22into their product design, investment processes and to provide enhanced transparency on the 23resulting implications, both from a financial and non-financial materiality perspective. 24In addition, as sustainability is an area where data, methods, and disclosure standards are still 25evolving, also in view of the continued evolution of the regulatory environment, participating 26in relevant industry initiatives provides us with the ability to contribute to the development of 27such new standards. 28Risks29Sustainability risks are inherent to our business activities and sustainability strategy. 30Sustainability risks result from the need to develop our product suite and the corresponding 31investment processes that are subject to increased public and regulatory attention and 32influenced by changes in client demand. Furthermore, the regulatory landscape continues to 33be ever evolving as regulators, governments, and other bodies including non-governmental 34organizations around the globe continue to take steps to protect investors through 35demanding transparency, consistency, and comparability. 36In 2023, regulators increased scrutiny in relation to potentially imprecise, vague, or 37misleading statements in relation to the consideration of sustainability factors within 38investment processes or product characteristics. In addition, regional regulatory variations 39and differing market standards create an increased regulatory risk and increased costs in 40addressing regulatory inquiries and requirements for enhanced disclosures. The above-41mentioned related impacts may have implications for various traditional risk types, including 42but not limited to strategic as well as non-financial risks (including greenwashing risks). If we 43are perceived to mislead stakeholders on our business activities or if we fail to achieve our 44stated net-zero ambitions, we could face greenwashing risk resulting in reputational damage, 45impacting our medium-term AuM growth targets and revenue generating ability. To meet 46these evolving regulatory and client expectations, DWS continuously develops and evolves its 47ESG related policies, data, methodology and processes.48Regulation and Supervision 49Opportunities50Responding to regulatory change by developing ESG related policies, data, methodology and 51processes to enhance the services we provide to our clients can further differentiate us from 52our competitors. 53We welcome the European Commission’s review of the current retail investor protection 54framework as it provides an important opportunity to address the issue of existing barriers to 55retail investor participation in the capital market, increase retail investor participation, and 56enhance the attractiveness and competitiveness of EU capital markets. We also believe we 57have the right product capabilities to adapt to a changing retail investment product 58landscape, if new inducement restrictions or transparency requirements should be introduced 59in the EU.60Risks61Regulatory reforms, together with increased regulatory scrutiny more generally, including 62ESG and other reforms have had and continue to have a significant impact on us and may 63adversely affect our business and ability to execute our strategic plans.64They may result in increased planning uncertainty, a higher cost base or higher capital 65demands, and hence may significantly affect our business model, financial condition and 66        67To our Shareholders Summarised 68Management Report69Consolidated 70Financial Statements Compensation Report Corporate Govern-71ance Statement72Supplementary 73Information DWS 2023 Annual Report74 75Outlook7623 DWS Group77The secret office supply is a "paperclip".