Market and Liquidity • Climate-related Market and Liquidity Risk Reports • Developed and presented climate-related market and liquidity risk reports to relevant risk committees to monitor and review the climate risk profile of our investments and deposits under various climate scenarios. • Reports enable analysis and monitoring of the portfolio, focusing on the impact of: • Climate-related risks on the value of our investments due to changes in credit spreads. • Climate-related risks on our deposits portfolio, including funding stability, potential outflows, and the adequacy of liquidity buffers, by incorporating climate shocks into baseline run-off rates based on sector and location. • Climate-related transition and physical risks on market and liquidity exposures, which are currently considered immaterial. • Management and Ongoing Efforts • Manage climate-related market and liquidity risks as part of BAU activities. • Continuously improve our understanding of how physical and transition risks may re-price assets, create market volatility, and impact credit quality and liquidity. Non-Financial • Climate-related Non-Financial Risk Report • Developed and presented climate-related non-financial risk reports to relevant risk committees to monitor and review the climate risk profile of internal operations, including outsourcing service providers. • The reports: • Enable analysis and monitoring of the physical inherent risk profile of the Group’s internal operations and outsourcing service providers. • Insights are used to enhance business continuity preparedness and improve resilience to climate physical risk events. • Analysis is conducted using a third-party proprietary tool, based on the IPCC Representative Concentration Pathways (RCP) 8.5 scenario for the 2030-2039 time horizon. • Flood risk identified as the most significant acute physical risk to the Group’s operations, with the overall inherent physical risk profile remaining stable. • Business Continuity Risk Assessments • Integrated inherent physical risk ratings into business continuity risk assessments to help us assess the impact and mitigation through existing controls, leading to the determination of a residual physical risk profile for internal operations. • Outsourcing Materiality Risk Assessments • Incorporated climate-related risk assessments into materiality risk evaluations for onboarding new outsourcing service providers and annual reviews of existing outsourcing service providers. • Operational Risk Tools • Identifies and assesses climate-relates risks where applicable through risk and control selfassessments (RCSA). • Tracks climate-related loss events using a climate flag in the loss database and reports them to relevant risk committees. • Incorporates climate physical risk assessments into decisions for establishing new branches or relocating existing ones. Integration into Our Climate-related Risk Management Risk Type 133 www.bankislam.com 01 02 03 04 05 SUSTAINABILITY STATEMENT 06 07 08 09
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