Deborah Hrvatin
Chief Risk Officer
Chief Risk Officer's report
As we reflect on the past year, it is clear that the landscape in which we operate is continually evolving.
The complexity and volatility of global markets, coupled with unprecedented technological advancements and increased cybersecurity risk alongside political and economic instability, have highlighted the criticality of robust risk management and a strong risk culture within our organization. Placing risk management at the forefront of our corporate strategy is therefore a business imperative. Most importantly, we need to be able to respond flexibly and dynamically to our shareholders’ needs. At CLS, this remains a top priority.
Change also presents new opportunities. In over three decades of financial services experience,
I have witnessed how resilience and adaptability are manifested within an organization. At CLS, we have advanced our risk management approach to ensure we can respond and adapt to current and anticipated challenges in 2024 and beyond. Our ongoing investment in enterprise resilience, technology and third-party risk management reflects our commitment to staying ahead.
Our risk management framework is the cornerstone of our strategy, enabling us to identify, assess and mitigate risks that may impede the achievement of our strategic objectives. This dynamic framework allows us to quickly adapt to emerging risks and regulatory changes. It is built on a foundation of strong governance, with clear roles and responsibilities defined across the organization to ensure a comprehensive and cohesive approach. We continually seek and facilitate opportunities to educate the organization on the three lines of defense model and thereby promote a strong risk culture – a crucial aspect of our role as a designated financial market utility.
“At CLS, we have advanced our risk management approach to ensure we can respond and adapt to current and anticipated challenges in 2024 and beyond. ”
Chief Risk Officer
As we look ahead, our primary focus will continue to be on our adaptability and responsiveness to the following key risks:
Economic volatility – The economic environment is characterized by significant volatility, exacerbated by political tensions and trade disputes among others. We conduct continuous and rigorous analysis of the impact of such market stresses on our settlement activities, and this enables us to adjust our operational strategy. Our liquidity, market and credit risk management approaches remain strong.
Cybersecurity threats – Continuing cyberattacks and current geopolitical tensions highlight the importance of advanced threat monitoring capabilities to safeguard against disruption to our services. As digital transformation accelerates, cybersecurity remains a paramount concern. This past year, and continuing into 2024, we are committed to enhancing our cybersecurity framework by incorporating enhanced threat detection and response capabilities.
Operational risks – Operational risks in the industry have been amplified post-pandemic, from supply chain disruptions and data breaches to human resource challenges. We have responded by focusing on third-party risk oversight, continuing to focus on the health and safety of our employees and embracing flexible work arrangements. Such actions not only protect our most critical asset – our employees – they also ensure resilience to operate our most critical services.
Regulatory compliance – We continue to operate in a dynamic environment which requires us to stay abreast of the regulatory landscape in which we operate our products and services. Compliance management systems need to keep pace and we continue to invest in tools and technology and engage with the regulatory community to stay ahead of changes and minimize disruption to our operations.
Beyond our core mission, we recognize our responsibility as an employer to ensure we contribute positively to a strong, resilient planet by giving ESG practices the attention they deserve within our organization. The United Nations Sustainable Development Goals (UN SDGs), which promote economic advancement and growth, support the foundation of our sustainability initiatives.
The wellbeing of our employees is as important to us as the resilience of our systems. Our people strategy values different perspectives, and we work tirelessly to ensure an inclusive, diverse and respectful culture.
Our focus on Diversity, Equity and Inclusion (DEI) continues to evolve through employee-led affinity groups such as the Sustainability Network, Women’s Forum, Black Employee Network, CLS Pride and Parents and Caregivers Network - all of which are supported by senior leaders.
In 2023, we published our Sustainability Statement, aligning with the UN SDGs and underpinned by key metrics in our quarterly Enterprise Risk Management Report which is shared with all CLS employees and the Board. ESG is embedded into our risk taxonomy, guiding our strategic initiatives and reinforcing our commitment to sustainability.
Our solid financial performance, operational resilience and progress with our ESG practices are testament to our robust risk management practices, particularly within such a challenging environment. Looking ahead, we are committed to enhancing our risk management practices, fostering a strong risk culture from the Board, through our leadership community and with every employee.
The past year has underscored the importance of an effective risk management framework, and our focus remains on further strengthening our resilience, safeguarding our shareholders’ interests and delivering our services effectively. We are confident that we are well equipped to take the opportunities and manage the challenges that may be presented.
Thank you for your continued trust and support.
Deborah Hrvatin
Chief Risk Officer
