Risks and Opportunities

Risks and opportunities

At UniCredit we are aware of the constant evolution of the context in which we operate and remain committed to examining it regularly and to listening to all our stakeholders in order to manage risks and capture business opportunities efficiently.

In doing this, we apply our double materiality analysis with the aim of selecting those who:

  • may affect our business activities
  • may be impacted by our operations

RISKS AND OPPORTUNITIES IDENTIFIED THROUGH THE ANALYSIS OF THE MARKET CONTEXT AND LINKED TO OUR MATERIAL CLUSTERS

INNOVATION FOR CLIENTS

Risks

  • Loss of market share due to a non-competitive and non-inclusive digital and ESG products offering
  • Unexpected shifts in customer expectations and disruptive technologies
  • Loss of market share and business focus if banking is not driven by customer needs

Opportunities

  • Responding to digital challenges in a client-centric manner, increasing clients' digitalisation and bank efficiency
  • Leveraging new technologies and analytics (e.g. big data, machine learning) to enhance the risk management process
  • Develop a product offer and commercial strategy which really reflect client needs in order to create sustainable long-term value

SYSTEMIC TRENDS

Risks

  • Threat of critical breakdown and cyber-attacks to our ICT systems, also in relation to the increase in smart-working
  • Climate change impact managed only in terms of reputational risk and not as a driver for lending strategies
  • Extreme weather events producing financial damage to bank premises and lending portfolio (physical risk)
  • Decrease in young people's level of trust towards economic, political and social structures
  • Supply constraints, energy price instability and reduction in energy security may dramatically increase geopolitical risks 

Opportunities

  • Strong and safe ICT systems represent a building block for stakeholder trust
  • Playing an important role in the transition to a low-carbon or circular economy by having a clear and effective strategy
  • Including ESG factors in our risk assessment framework can strengthen our long-term strategy
  • Intercepting ethical behaviours and values capable of inspiring younger generations can contribute to building their trust
  • An innovative, proactive and visionary approach to the transition challenges can provide profitable business opportunities 

LEAN AND SOLID BANK

Risks

  • Uncertain and volatile economic, geopolitical and environmental scenario affecting our short and long-term planning
  • Negative market developments can spread from economies, exacerbating the bank's environment
  • Bank's internal structures not ready to respond to a constant expansion of the regulatory framework 

Opportunities

  • Strong capital position and lean and solid structure increase stakeholder confidence
  • Leaner processes can increase our flexibility and speed of response to external challenges
  • Anticipating the regulatory framework updates can help us expand and strengthen our business

PEOPLE DEVELOPMENT

Risks

  • A low attraction and retention of talents impacts on succession plans and pioneering in new business areas
  • Disruptive technologies and tough competition may force a significant reskilling of employees
  • Decrease in people engagement due to lack of incentives in terms of development, inclusion and work-life balance 

Opportunities

  • Transform employees into an innovative and tech-oriented workforce
  • Investing in training employees in modern skills can maintain our leadership in evolving market conditions
  • Be an employer of choice with a widespread diversity and inclusion culture and concrete work-life balance solutions 

ETHICS

Risks

  • Compliance and sanctions risk undermining bank's reputation
  • Being impacted by human rights abuses and other unethical business practices, also through our lending portfolio
  • Lack of pre-emptive measures aimed at preserving the working environment from the spread of viruses 

Opportunities

  • Maintain high reputation among stakeholders with a strong business ethics and by avoiding non-compliance sanctions
  • Increase awareness of importance of human rights and ethics in general within the bank and client base
  • Build a safe workplace for employees by permitting new solutions to work efficiently from home and thus maintain our business continuity

POSITIVE IMPACT ON SOCIETY

Risks

  • The attention of the bank to its social impact not perceived or socially accepted by stakeholders
  • Risk of losing the role of backbone of the real economy
  • Failure in identifying and providing assistance to people and organisations at risk of financial and social exclusion, especially those most impacted by the pandemic 

Opportunities

  • Being perceived as the bank of choice thanks to our inclusive approach
  • Increase our offer of sustainable financing instruments with measurable ESG impact to foster the achievement of SDGs
  • Being a leader of economic growth, financial education and well-being in our communities, in particular after the pandemic