Risk

  • GRI:
  • Role of the highest governance body in overseeing the management of impacts2-12
    Role of the highest governance body in overseeing the management of impacts

We modify and develop our risk management methods on an ongoing basis, taking into account changes in the Group’s risk profile and the economic environment, as well as regulatory requirements and market best practices.

Risk management system

RISK MANAGEMENT SYSTEM
Objectives Responsibility for implementation Material risks identified
  • identification and measurement of risks taken
  • determination of the most favourable return for the acceptable risk level
  • regular setting and review of appropriate limits to reduce the exposure to risks
 Management Board and Supervisory Board:

  • approval of risk management policies
  • participation in risk management committees
  • participation in risk reviews
  • approval of risks and risk level reports. The Management Board adopts and the Supervisory Board approves the „Risk Appetite Statement”, which defines the level of acceptable risk in the bank and applicable risk limits

Separate dedicated units within the Bank’s structures:

  • identification
  • measurement
  • monitoring
  • risk mitigation

 
  • credit risk (including concentration risk)
  • operational risk
  • market risk (banking and trading book)
  • liquidity risk
  • model risks
  • reputational risk
  • compliance risk
  • business risk
  • capital risk
  • excessive leverage risk

ESG risk management within the risk management framework

  • GRI:
  • Processes to remediate negative impacts2-25
    Processes to remediate negative impacts
  • Management of material topics (identified as material in the materiality matrix) for the topic: Integrating ESG into the organisation's risk management system3-3
    Management of material topics (identified as material in the materiality matrix) for the topic: Integrating ESG into the organisation's risk management system

Approach

We have identified social and environmental risks, including climate risks, associated with the financing of customer projects in sensitive sectors. From the point of view of the negative impact of individual risks on social, environmental, labour, human rights and anti-corruption issues, operational risk, compliance risk and reputational risk are of particular importance. The management of socio-environmental risks in our bank has been governed by relevant policies since 2015.

In 2021, we implemented the „Social, Environmental and Climate Change Risk Management Policy”.

We persistently implement ESG risk procedures across all business lines and we have identified social and environmental risks, including climate risks and risks associated with financing customer ventures in sensitive sectors.

Risk Committee

The tasks of the Risk Committee include in particular:

  • giving an opinion on the bank’s overall current and future risk appetite;
  • giving an opinion on the risk management strategy developed by the bank’s Management Board and supervising its implementation;
  • supporting the Management Board in overseeing the implementation of the risk management strategy by senior management;
  • verifying whether the prices of liabilities and assets offered to customers fully reflect the bank’s business model and its risk strategy and, in the event of a negative verification, making proposals to the bank’s Management Board ensuring the adequacy of prices of liabilities and assets in relation to risks;
  • giving an opinion in the process of appointing and removing the Member of the Management Board in charge of risk management, as well as giving its opinion on the annual objectives and their implementation.

At the bank, we analyse the impact of climate-related opportunities and risks on business operations, strategy and financial plans over the short, medium and long term. In making lending decisions, the bank is aware that relying solely on historical financial data can lead to wrong conclusions, while simultaneous analysis of non-financial data can shed new light on risk perception and capital allocation.

In our view, environmental risk analysis enhances the classic credit risk analysis and non-financial data provides a better understanding of the borrower's exposure to environmental and climate change risks.

Plans

From 2022 onwards, selected customer segments (largest customers, mortgage and leasing customers), will be covered by the Sustainable Finance Classification System (SFCS), which defines the technical criteria that dedicated green finance and general purpose finance must meet to be called green or socially sustainable.

Sectoral policies

When considering applications for financial products or services from entities representing  sensitive business sectors, the bank applies relevant policies together with a socio-environmental risk analysis. First, the bank’s business units assess the environmental impact of the specific transaction/activity of the customer and compliance with the requirements described in the policies. On this basis, a recommendation is prepared to the relevant risk units of the bank (in accordance with internal regulations).

In 2021, we implemented the Social, Environmental and Climate Change Risk Management Policy. The previous three sector policies on soft commodities, the energy sector and mining and metals ceased to apply on the date of entry into force of the new document.

Responsibility for ESG risk management

  • GRI:
  • Role of the highest governance body in overseeing the management of impacts2-12
    Role of the highest governance body in overseeing the management of impacts
  • Delegation of responsibility for managing impacts2-13
    Delegation of responsibility for managing impacts

The ESG Forum has been responsible for planning our activities under the Responsible Banking Strategy since 2021. The Forum consists of 11 members representing all banking divisions and is chaired by the bank’s CEO.

The tasks of the Forum include:

  • analysing the challenges, opportunities and risks of the EU Sustainable Finance agenda, including ESG risks;
  • planning activities;
  • coordinating the implementation of the activities in the bank.

The results of the ESG Forum’s work are reported regularly to the bank’s Management Board and twice a year to the Responsible Banking and Corporate Culture Committee.

The bank’s Management Board is responsible for overseeing and approving the Responsible Banking Strategy and the integration of ESG criteria into the overall business strategy (in the short, medium and/or long term) and into risk management.

At Santander Bank Polska S.A., all Management Board Members are responsible for ESG risk issues. The Risk Division acts as the second line of defence in the management of ESG risks.