STRATEGIC REVIEW 7 REGULATORY/COMPLIANCE RISK 8 CLIMATE RISK Mitigation • The deployment of Business Compliance Officers at Business and Support Units to facilitate the identification and management of Compliance Risks. • Formulation of Compliance Risk Assessment (CRA) methodology to assist in identifying and measuring the Compliance risks level, i.e. Critical, High, Medium and Low. • Formulation of Compliance Review Plan for both Compliance Monitoring & Testing and Shariah Compliance Review to prioritse the resources. • Implementation of the Institutional Risk Assessment (IRA) to strengthen and address the ML/TF risks at branches and business units. • Adoption of Robotic Processing Automation in managing the AML System alert. • Formulation of Corruption Risk Management (CRM) to identify potential corruption risks, and assess the identified risks in terms of likelihood and impact. • Establish internal threshold limits for monitoring of customer transactions. Mitigation • Develop and implement an ESG Risk Framework covering identification, mitigation and monitoring of climate change risk. • Implementation of the BNM Climate Change Principles-based Taxonomy (CCPT) to classify financing exposures according to severity of climate risk. • Conducting ESG due diligence of new and existing financing customers that carry elevated climate risk indicators based on sector and business activity. • Maintain robust and prudent climate risk policy and limits in-order to reduce and minimise exposure to sectors with the highest climate risk exposure, i.e. coal power generation and mining. • Climate risk exposures and mitigation efforts are reported to the Management and Board Committees. Definition Definition Risk of legal or regulatory sanctions, material financial loss, or reputational loss suffered as a result of failure to comply with the laws, regulations, rules, related self-regulatory organisation standards, and codes of conduct applicable to BIMB’s banking activities. Risk of losses resulting from adverse climate change impacts arising from physical and transition risk including extreme weather events, sea level rise, droughts and floods, and policy changes such as carbon taxes. INTEGRATED ANNUAL REPORT 202 1 Key Messages Overview Value Creation MD&A Sustainability Leadership Accountability Financial Additional Information 61
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