. Risk assessment .. Material climate-related risks and opportunities The Group undergoes an annual operational and strategic risk assessment process, which provides senior management with an objective assessment of the risks to which the Group is exposed and the measures to control Physical climate risks and opportunities Transition climate risks and opportunities them. The relevance and impact of our business on Source: gradual changes or natural disasters related to perturbated Source: socio-economic, regulatory or technological changes generated a changing climate is, amongst other risks, global natural cycles that could affect the Group’s operations or activities by the transition to a low-carbon economy that could affect the Group’s considered in the Group’s annual review of Time horizon: medium to long term operations or activities material non-financial risks. Rothschild & Co approach: Time horizon: short to long term To assess, in particular, the effect of climate ■ Operations: physical risks resulting from a changing climate are Rothschild & Co approach: change on our operations and activities, the considered as part of the group’s ongoing Business Continuity ■ Operations: transition risks are mainly related to the climate impact Group conducted several climate workshops assessments and planning of our operations and increased disclosure obligations with key stakeholders within our businesses ■ Activities: physical risk is one of the elements taken directly or ■ Activities: transition risks are relevant and considered in business and support functions. This approach led to indirectly into account in the ESG investment framework in the planning and product & service development the identification of the most material risks Wealth & Asset Management and Merchant Banking business resulting from a changing climate that have an effect on our business, and for which the deployment of mitigation actions are needed. In its climate risk assessment, the Group considers both physical and climate-related risks. Climate change integration in the Group risk management framework The Group has adopted a risk governance model that is applied across the Group’s businesses and requires that all of the business lines and functions establish processes for identifying, evaluating and managing the key risks faced by the Group, including climate-related ones. It is based on the concept of ‘three lines of defence’. This model distinguishes between functions owning and managing risks, functions overseeing risks and functions providing independent assurance.