CIM FINANCE. INTEGRATED REPORT 2022 | 67 2. MATERIAL RISK TYPES (continued) MAIN RISK TYPE GOVERNANCE KEY CONTROLS & RISK MITIGATION COMPLIANCE RISK Compliance risk is the risk of sanctions and financial loss CFSL may suffer from failure to act in accordance with the laws and regulations, internal policies or best practices. CFSL is exposed to compliance risk primarily through: • Laws and regulatory requirements • Confidentiality and Data protection responsibilities • Regulatory and statutory reporting obligations Governing Policies • Anti-Money Laundering Policy • Anti-Bribery and Corruption Policy • Compliance policy and Charter • Data Privacy Policy and Policy Statement Key Board / Management Committees • Operational risk forum • Management Committee • Audit and Compliance Committee • Corporate Governance and Conduct Review Committee • Mandatory training for all employees. • Independent compliance function in place. • Second and third line of controls. • Effective customer onboarding processes in place. • Pre-employment due diligence carried out. • Enhanced customer due diligence for high-risk customers. • Risk assessments of processes, products, clients and channels to ensure CFSL understands the money laundering and terrorist financing risks. • Thorough monitoring of customer transactions. • Enhancement to the existing customer screening capabilities. • Adherence to statutory reporting requirements. 2.2. OTHER RISK TYPES In addition to the above material risks, managing the Strategic Risk is another major component of CFSL’s Risk Management framework. 2.2.1. STRATEGIC RISK Strategic risk is the risk of inadequate returns over the long-term. It includes the failure to develop an effective and sustainable long-termstrategy, the inadequate execution of a chosen strategy, or failure to adapt a chosen strategy where fundamental assumptions underpinning the strategy have changed. Strategic risks for CFSL arisemostly from the exposure to themacroeconomic environment, changes in the competitive landscape, regulatory and technological developments. It also implicitly includes elements of non-standard risks such as reputational risk. CFSL’s Risk Management framework provides the mechanism for the Board and Management to consider such matters. The strategic risks and opportunities we are prioritising include: • Digital adoption – CFSL continues to effectivelymanage a range of technology programmes, including supporting the Group’s strategy to accelerate its transition to digital, complying with the evolving regulatory environment, whilst continuing to invest in improving resilience, efficiencies and customer experience across channels. • Climate action – CFSL was the first institution inMauritius to issue green bonds. Momentumhas been building fast around the world and Mauritius for organisations to transit to net zero emissions. The Group’s strategy is to continue this challenge by adapting our products, processes and services. The Group also intends to harness the emerging opportunities to support our customers in reducing their emission.
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