Strategic Shareholder Climate and Risk Financial Financial Barclays PLC 271 report information sustainability report Governance review review statements Annual Report 2022 Material existing and emerging risks (continued) some previously hindered by banking which the business of financial services is (including central bank digital currencies regulation (such as FinTechs), to provide conducted. Measures taken include and global stable coins) and cybersecurity. This also includes the customers with access to banking facilities enhanced capital, liquidity and funding and increase disintermediation of banking requirements, the separation or introduction of new and/or enhanced services. prohibition of certain activities by banks, regulatory standards in these areas; changes in the operation of capital New technologies and changing consumer • increasing regulatory expectations of markets activities, the introduction of tax behaviour have required and could require firms around governance and risk levies and transaction taxes, changes in management frameworks, particularly the Group to incur additional cost to compensation practices and more detailed modify or adapt its products or make for management of climate change, requirements on how business is additional capital investments in its diversity and inclusion and other ESG conducted. The governments and businesses to attract and retain clients and risks and enhanced ESG disclosure and regulators in the UK, the US, the EU or customers or to match products and reporting obligations; elsewhere may intervene further in relation services offered by its competitors, • the continued evolution of the UK’s to areas of industry risk already identified, including technology companies. regulatory framework following the UK's or in new areas, which could adversely Ongoing or increased competition and/or withdrawal from the EU, including in light affect the Group. disintermediation of banking services may of the UK financial services regulatory Current and anticipated areas of particular put pressure on the pricing of the Group’s reform agenda announced in December focus for the Group’s regulators, where 2022 and the proposals in the Financial products and services, which could reduce regulatory changes could have a material the Group’s revenues and profitability, or Services and Markets Bill, and similarly effect on the Group’s business, financial may cause the Group to lose market share, regarding the access of UK and other condition, results of operations, prospects, particularly with respect to traditional non-EU financial institutions to EU capital position, and reputation, include, banking products such as deposits, bank markets; but are not limited to: accounts and mortgage lending. This • the implementation of the reforms to competition may be on the basis of quality • the increasing focus by regulators, the Basel III package, which includes and variety of products and services international bodies, organisations and changes to the RWA approaches to offered, transaction execution, innovation, unions on how institutions conduct credit risk, market risk, counterparty risk, reputation and/or price. These factors business, particularly with regard to the operational risk, and credit valuation delivery of fair outcomes for customers, may be exacerbated by further industry adjustments and the application of RWA wide initiatives to address access to promoting effective competition in the floors and the leverage ratio; banking. The failure of any of the Group’s interests of consumers and ensuring the • the implementation of more stringent businesses to meet the expectations of orderly and transparent operation of capital, liquidity and funding clients and customers, whether due to global financial markets, including the requirements; proposed introduction in the UK of a general market conditions, • the ongoing regulatory response to the underperformance, a decision not to offer new consumer duty and measures COVID-19 pandemic and its a particular product or service, branch resulting from ongoing thematic reviews implications for banks’ credit risk closures, changes in client and customer into the workings of the retail, small- and management and provisioning expectations or other factors, could affect medium-sized enterprise and wholesale processes, capital adequacy and banking sectors and the provision of the Group’s ability to attract or retain liquidity, and a renewed focus on clients and customers. Any such impact financial advice to consumers; vulnerable customers including the could, in turn, reduce the Group’s • the implementation of any conduct treatment of customers and revenues. measures as a result of regulators’ focus consideration of longer-term initiatives v) Regulatory change agenda and impact on organisational culture, employee to support borrowers in financial on business model behaviour and whistleblowing; difficulty and measures designed to The Group’s businesses are subject to • the demise of certain benchmark maximise access to cash for consumers; ongoing regulation and associated interest rates and the transition to new • the incorporation of climate change regulatory risks, including the effects of risk-free reference rates (as discussed within the global prudential framework, changes in the laws, regulations, policies, further under ‘vi) Impact of benchmark including the transition risks resulting voluntary codes of practice and interest rate reforms on the Group’ from a shift to a low carbon economy interpretations in the UK, the US, the EU below); and its financial effects; and the other markets in which it operates. • reviews of regulatory frameworks Many regulatory changes relevant to the • increasing requirements to detail applicable to the wholesale financial Group’s business may have an effect management accountability within the markets, including reforms and other beyond the country in which they are Group (for example, the requirements of changes to conduct of business, listing, the Senior Managers and Certification enacted, either because the Group’s securitisation and derivatives related regulators deliberately enact regulation Regime in the UK and similar regimes requirements; with extra-territorial impact or its global elsewhere that are either in effect or • the focus globally on technology operations mean that the Group is obliged under consideration/implementation), adoption and digital delivery, to give effect to local laws and regulations as well as requirements relating to underpinned by customer protection, executive remuneration; on a wider basis. including the use of artificial intelligence In recent years, regulators and • changes in national or supra-national and digital assets (data, identity and governments have focused on reforming requirements regarding the ability to disclosures), financial technology risks, both the prudential regulation of the offshore or outsource the provision of payments and related infrastructure, financial services industry and the ways in services and resources or transfer operational resilience, virtual currencies