AmazonScience/document-haystack

1Strategic Risk2Strategic risk is the risk of an operating income shortfall due to lower-than-expected 3performance in revenues not compensated by a reduction in costs. Strategic risk may arise 4from a decline in our assets under management driven by changes in asset values, from our 5ability to attract and retain assets under management and maintain competitive investment 6performance or from changes to the competitive landscape (including tight labour markets) 7or regulatory framework. Strategic risk is a material risk type that may arise due to a failure to 8execute our strategy and/or failure to position us strategically and/or failure to effectively 9take actions to address underperformance caused by external or internal factors. Exposure 10categories to help guide the assessment process for strategic risk include competitive 11landscape, key personnel, regulation, strategic relationships, macroeconomic downturn, and 12product suite. 13The strategic and capital plan is approved annually by the Executive Board. During the year, 14execution of business strategy is regularly monitored to assess the performance against 15strategic objectives and to seek to ensure we remain on track to achieve targets.16Liquidity Risk17IFRS 7/IAS 118Liquidity risk is the risk arising from our potential inability to meet all payment obligations 19when they come due or only being able to meet these obligations at excessive costs. The 20objective of the Group’s liquidity risk management framework is to ensure that it can always 21fulfil its payment obligations and can manage liquidity and funding risks within the agreed 22risk appetite. The framework considers relevant on-balance sheet and off-balance sheet 23drivers of liquidity risk as well as expected future cash flows.24Capital and Liquidity Management is mandated to manage the overall liquidity and funding 25position of the Group as well as the liquidity risk profile. Risk oversees the application of the 26liquidity risk framework and adherence to the risk appetite.27The Group proactively manages liquidity risks by:28– Maintaining a liquid balance sheet with a prudent cash buffer 29– Maintaining a funding plan, aligned with the strategic plans of the Group, to assess 30upcoming funding demands and sources31– Stress testing of a rolling 12-month liquidity position, based on the funding plan, by applying 32a combined, market and idiosyncratic stress event in which the Group needs to remain 33solvent over a prolonged period of stress34– Monitoring regular stress testing results and identifying potential liquidity risks 35– Maintaining contingency funding procedures to enable swift and coordinated action and 36decision making in a liquidity crisis event 37On 31 December 2023, the 12-month projected liquidity position after stress was well within 38the risk appetite. 39Liquidity risk is an area of lesser concern for the Group due to the cash generating nature of 40our business and the conservative funding profile of our balance sheet. We principally fund 41the business through equity and cash generated from operations. We may, however, raise 42debt funding to address specific funding demands that may arise as part of growing the 43business.44As part of the annual strategic planning process, we project the development of the key 45liquidity and funding metrics based on the underlying business plans to ensure that the plan 46complies with risk appetite. This includes maintaining a funding plan to specifically assess 47upcoming funding demands and sources to accommodate projected seed and co- 48investments within the respective limits. 49To diversify our funding and access to liquidity, we have put in place a revolving credit facility 50of € 500 million for general corporate purposes under which there were no drawings as of 5131 December 2023.52For the maturity analysis of financial liabilities please refer to note ‘09 – Financial Instruments’ 53to the ‘Consolidated Financial Statements’. 54Risk Diversification and Concentration55Risk Concentrations 56IFRS 7/IAS 157Risk concentrations refer to clusters of the same or similar risk drivers within risk types, 58including risk concentrations in operational, credit, market, liquidity and other risks. They 59could occur within and across counterparties, businesses, regions/countries, industries, and 60products. The management of concentrations is integrated into the management of individual 61risk types (e. g., operational, credit, market, liquidity risk management) and monitored on an 62ongoing basis, with the key objective to avoid excessive risk concentrations. This is supported 63by limit setting on different levels and/or management according to risk type.64        65To our Shareholders Summarised 66Management Report67Consolidated 68Financial Statements Compensation Report Corporate Govern-69ance Statement70Supplementary 71Information DWS 2023 Annual Report72 73Risk Report7454 Financial Risk