Strategic Shareholder Climate and Risk Financial Financial Barclays PLC 280 report information sustainability report Governance review review statements Annual Report 2022 Material existing and emerging risks (continued) financial services and understand the Group operates. Understanding the carbon intensity or local environmental protection available to them if something Conflicts of Interest that impact or impact; (ii) potential association with goes wrong. Poor customer outcomes can potentially impact the Group enables human rights violations (including result from the failure to: (i) communicate them to be handled appropriately. Even if combating modern slavery) in the Group’s fairly and clearly with customers; (ii) there is no evidence of improper actions, a operations or supply chain and by clients provide services in a timely and fair Conflict of Interest can create an and customers; and (iii) the financing of manner; (iii) handle and protect customer appearance of impropriety that businesses which manufacture and export data appropriately; and (iv) undertake undermines confidence in the Group and military and riot control goods and appropriate activity to address customer its Employees. If the Group does not services. detriment, including the adherence to identify and manage Conflicts of Interest Reputation risk could also arise from regulatory and legal requirements on (business or personal) appropriately, it negative public opinion about the actual, or complaint handling. The Group is at risk of could have an adverse effect on the perceived, manner in which the Group financial loss and reputational damage as a Group’s business, customers and the (including its employees, clients and other result. markets within which it operates. associations) conducts its business A key area of focus is the implementation f) Regulatory focus on culture and activities, or the Group’s financial accountability and embedment of the FCA’s new performance, as well as actual or perceived Consumer Duty, with rules for open practices in banking and the financial Regulators around the world continue to products and services due to take effect at services industry generally. Modern emphasise the importance of culture and the end July 2023. This will impact areas technologies, in particular, online social personal accountability and enforce the including governance and accountability, media channels and other broadcast tools adoption of adequate internal reporting MI and reporting, communications, that facilitate communication with large and whistleblowing procedures to help to product design and end-to-end customer audiences in short time frames and with promote appropriate conduct and drive journeys. The Group may be required to minimal costs, may significantly enhance positive outcomes for customers, incur significant additional expense in and accelerate the distribution and effect colleagues, clients and markets. The connection with this regulatory change. of damaging information and allegations. requirements and expectations of the UK Negative public opinion may adversely Senior Managers Regime, Certification c) Product design and review risk affect the Group’s ability to retain and Regime and Conduct Rules reinforce Products and services must meet the attract customers, in particular, corporate additional accountabilities for individuals needs of clients, customers, markets and and retail depositors, and to retain and across the Group, with an increased focus the Group throughout their life cycle, motivate staff, and could have a material on governance and rigour, with similar However, there is a risk that the design and adverse effect on the Group’s business, requirements also introduced in other review of the Group’s products and results of operations, financial condition jurisdictions globally. Failure to meet these services fail to reasonably consider and and prospects. requirements and expectations may lead address potential or actual negative to regulatory sanctions, both for the In addition to the above, reputation risk has outcomes for customers, which may result individuals and the Group. the potential to arise from operational in customer detriment, enforcement issues or conduct matters which cause For further details on the Group’s approach action (including regulatory fines and/or + to conduct risk, refer to the conduct risk detriment to customers, clients, market sanctions), redress and remediation and management and conduct risk performance integrity, effective competition or the sections. reputational damage. Both the design and Group (refer to ‘v) Operational risk’ above). review of products and services are a key viii) Reputation risk area of focus for regulators and the Group. For further details on the Group’s approach + to reputation risk, refer to the reputation Reputation risk is the risk that an action, d) Financial crime risk management and reputation risk transaction, investment, event, decision or performance sections. The Group may be adversely affected if it business relationship will reduce trust in fails to effectively mitigate the risk that ix) Legal risk and legal, competition and the Group’s integrity and/or competence. third parties or its employees facilitate, or regulatory matters Any material lapse in standards of integrity, that its products and services are used to The Group conducts activities in a highly compliance, customer service or operating facilitate, financial crime (money regulated global market which exposes it efficiency may represent a potential laundering, terrorist financing, breaches of and its employees to legal risk arising from: reputation risk. Stakeholder expectations economic and financial sanctions, bribery (i) the multitude of laws and regulations constantly evolve, and so reputation risk is and corruption, and the facilitation of tax that apply to the businesses it operates, dynamic and varies between geographical evasion). UK and US regulations covering which are highly dynamic, may vary regions, groups and individuals. A risk financial institutions continue to focus on between jurisdictions and/or conflict, and arising in one business area can have an combating financial crime. Failure to may be unclear in their application to adverse effect upon the Group’s overall comply may lead to enforcement action by particular circumstances especially in new reputation and any one transaction, the Group’s regulators, including severe and emerging areas; and (ii) the diversified investment or event (in the perception of penalties, which may have a material and evolving nature of the Group’s key stakeholders) can reduce trust in the adverse effect on the Group’s business, businesses and business practices. In each Group’s integrity and competence. The financial condition, prospects and case, this exposes the Group and its Group’s association with sensitive topics reputation. employees to the risk of loss or the and sectors has been, and in some e) Conflicts of interest imposition of penalties, damages or fines instances continues to be, an area of from the failure of members of the Group Identifying and managing Conflicts of concern for stakeholders, including: (i) the to meet their respective obligations, Interest is fundamental to the conduct of financing of, and investments in, including legal, regulatory or contractual the Group's business, relationships with businesses which operate in sectors that requirements. Legal risk may arise in Customers, and the markets in which the are sensitive because of their relative