AmazonScience/document-haystack

1management. Risk-specific portfolio strategies complement this framework and allow for an 2in-depth implementation of the risk strategy at the portfolio level, addressing risk specifics 3including risk concentrations.4Stress Testing5Stress testing is performed on a regular basis to assess the impact of a severe 6macroeconomic downturn or other shocks on our capital profile and financial position. This 7exercise complements traditional risk measures and leverages Deutsche Bank Group’s stress 8testing process with enhancements tailored to our risk profile as an asset manager. All 9material risk types which consume capital and liquidity risk are subject to stress testing. The 10time-horizon of internal stress tests is generally one year and can be extended to multi-year, if 11required by the scenario assumptions. 12Risk Measurement and Monitoring13The appropriate measurement of all risks is a crucial prerequisite for robust risk management. 14All risks are measured quantitatively and/or qualitatively, using advanced and approved 15methodologies. All measurement approaches must be appropriate for the type and 16materiality of risk measured and must provide sufficient transparency including correlation. 17Quantitative analysis allows the measurement of the potential impact (severity and likelihood) 18and is complemented by robust qualitative measures that are designed to ensure 19comprehensive coverage of all risks on a risk-based approach. All material non-financial, 20financial, sustainability and strategic risks, are managed via dedicated risk management 21processes. Modelling and measurement approaches for quantifying risk and capital demand 22are implemented across the material risk types. Reputational risk is implicitly covered in our 23economic capital framework – which is designed to ensure that we maintain an adequate 24capitalization to cover the risks to which we are exposed – primarily within operational and 25strategic risk. Established teams within Finance, Capital and Liquidity Management and Risk 26assume responsibility for measurement, analysis and reporting of risks while promoting the 27appropriate quality and integrity of risk-related data.28We monitor all risks taken against risk appetite and in consideration of risk and reward at the 29Group level, underlying risk type, and at the portfolio level. 30The monthly risk and capital profile report is used to detail the risk profile and is presented to 31the Risk and Control Committee and used as the basis for regular reporting to the Executive 32Board and the Audit and Risk Committee. The risk and capital profile report is complemented 33by other standard and ad-hoc management reports maintained and produced by Risk, 34Finance, and Capital and Liquidity Management, which are presented to the Risk and Control 35Committee and/or its sub-committees where appropriate. 36We use a variety of data sources to support internal and external reporting. The risk 37infrastructure considers reporting at relevant legal entity and business levels and provides the 38basis for reporting on risk positions, capital adequacy and limit utilization to the relevant 39functions on a regular and ad-hoc basis.40Model Risk 41Model risk is the risk of adverse consequences from decisions based on incorrect and/or 42misused models.43Model risk management is a core component of our risk management framework. We rely on 44models for investment, portfolio management, risk management, valuation, capital planning, 45and other purposes. The model risk management framework is in place to safeguard the 46interests of our clients and stakeholders as well as to fulfil regulatory requirements. 47A model is defined as a quantitative method, system, or approach that applies statistical, 48economic, financial, mathematical theories, techniques and assumptions to process input 49data into quantitative estimates.50A model consists of three components:51– an input component which consists of assumptions and data52– a processing component which transforms inputs into estimates, i. e., output 53– a reporting component which translates the output into useful business information54The definition of a model also covers quantitative approaches whose inputs are qualitative or 55based on expert judgement, provided that the output is quantitative in nature. Models used 56by us and covered by the model risk framework include models used for both fiduciary and 57non-fiduciary purposes and may either be internally developed and/or sourced from third 58party vendors. 59Model risk appetite is designed to ensure that model risk management is embedded in our 60risk culture and that risks are mitigated as appropriate.61        62To our Shareholders Summarised 63Management Report64Consolidated 65Financial Statements Compensation Report Corporate Govern-66ance Statement67Supplementary 68Information DWS 2023 Annual Report69 70Risk Report7148 Risk Framework