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  5. 5 Climate Report
    1. 2 Responsible business conduct
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  6. 5.4 Risk management
    1. 5.1 Introduction
    2. 5.2 Governance
    3. 5.3 Strategy
    4. 5.5 Key figures and targets

5.4 Risk management

ESG-related risk management process

The management of ESG risks, including climate-related risks, is an integral part of the SZKB risk management process. Sustainability aspects are systematically integrated into this process, which consists of five phases:

  1. Continuous identification of pertinent risks and risk drivers.
  2. Assessment of identified risks.
  3. Ongoing management of risks in everyday business operations.
  4. During monitoring, applicable standards and control mechanisms are subject to review or quality assurance.
  5. Reporting provides all hierarchical levels with a transparent and current overview of the underlying risk profile and the respective risk position.

Each year SZKB updates its ESG risk inventory, which it is constantly expanding to cover the dimensions of E, S and G. Climate risks are part of the environmental dimension and are divided up into physical and transition risks that are acute or chronic in nature. Key ESG risk drivers and their transmission channels to risk categories and portfolios are defined and described in detail. The assessment is based on exposure, likelihood and impact, from which a score is derived. This score helps identify key transmission channels. The qualitative assessment includes gross and net risks and takes into account regional circumstances (e.g. hazard maps of the Federal Office for the Environment (FOEN)) as well as SZKB risk-mitigating measures. The analysis is complemented by an assessment of long-term trends. A defined threshold identifies key ESG risk drivers, which are assigned to the relevant risk categories and risks and are regularly adjusted. As a result of this allocation, ESG risk drivers are taken into account within the risk assessments carried out on an annual basis and are incorporated into the risk management process.

The annual risk inventory of ESG risk drivers is prepared for the Sustainability Committee on an interdisciplinary basis under the aegis of the Sustainability Committee in conjunction with experts from areas such as Risk Management.