23. When setting, approving and overseeing the implementation of the aspects listed in Paragraph 22 …

When setting, approving and overseeing the implementation of the aspects listed in Paragraph 22 the management body should aim at ensuring a business model, governance arrangements, including a risk management framework that take into account all risks. When taking into account all risks, institutions are exposed to, institutions should take into account all relevant risk factors, including environmental, social and governance risk factors. Institutions should consider that the latter may drive their prudential risks, including credit risks, e.g. via risk factors related to the transition to a sustainable economy or external physical climate-related events that may affect debtors, market, liquidity, operational risks and also reputational risks, e.g. via social and governance risk factors, e.g. in the context of outsourcing arrangements¹⁶ . Such risks include, e.g. legal risks in the area of contractual or labour law, risks related to potential human rights violations or other ESG risk factors that may affect the country where a service provider is located and its ability to provide the agreed service levels.

¹⁶ See EBA report on ESG risk management and supervision published under the CRD Art. 98(8) for a description of EBA’s understanding of ESG risks, transmission channels, and recommendations for arrangements, processes, mechanisms and strategies to be implemented by institutions to identify, assess and manage ESG risks.

1. Forbhreathnú

1.1 Tagairtí

1.2 Ceanglais aitheanta

1.3 Caighdeáin ghaolmhara

2. Ceanglais aitheanta

3. Caighdeáin ghaolmhara

• EBA - Published by the European Banking Authority at https://www.eba.europa.eu/