Material risks

Sustainability related risks with negative financial effects that materially affect  (or  could  reasonably  be  expected  to  affect)  the  undertaking’s  cash flows, access to finance, or cost of capital over the short, medium or long term.

Essential risks are critical factors that can impair a company's ability to achieve its business objectives and effectively implement strategic plans. These risks can arise from various sources, including external events, internal processes, and human errors. The most common categories of essential risks include IT security threats, product quality risks, weaknesses in internal control systems, human errors, strategic misjudgments, and compliance risks. In the banking sector, additional specific risks such as credit, market price, liquidity, and operational risks are distinguished, which require special attention.

The identification and management of these risks take place within the framework of a comprehensive risk management system, which includes a systematic capture and assessment of all relevant risk areas. Monitoring systems, preventive damage-limiting measures, and the use of insurance play a vital role in this process. For top management, it is crucial to continuously monitor essential risks and report transparently on them, as they can pose both short-term existential threats (e.g., liquidity shortages) and long-term challenges (e.g., strategic misjudgments).Overall, early identification, assessment, and management of essential risks are essential for the long-term stability and sustainable success of a company. Every company should regularly review its specific risks and implement appropriate risk mitigation measures.