Reputational Risk Management
Our business model is built on public trust, so it is essential that in addition to standard risk inherent to our business, we avoid risks that can undermine trust.
The reputation of Deutsche Bank is founded on trust from its employees, clients, shareholders, regulators and from the public in general. Isolated events can undermine that trust and negatively impact Deutsche Bank’s reputation and it is therefore of the utmost importance that it is protected, for which it is the responsibility of every employee of the Bank.
Reputational risk at Deutsche Bank is defined as the risk of possible damage to Deutsche Bank’s brand and reputation, and the associated risk to earnings, capital or liquidity arising from any association, action or inaction which could be perceived by stakeholders to be inappropriate, unethical or inconsistent with the Bank’s values and beliefs. Reputational risk is governed by the Reputational Risk Framework, which was established to provide consistent standards for the identification, assessment and management of reputational risk issues.
Identification of reputational risk
The assessment of reputational risk is, due to the nature of this type of risk, constantly evolving and dependent on numerous factors at any given point in time and it is therefore not possible either to define all matters and circumstances which may pose reputational risk, or to set out all the considerations which should be applied as part of the decision-making process.
In order to assist employees with the identification of reputational risk, the Global Reputational Risk Guidelines have been published which set out certain criteria which employees should consider in the assessment of reputational risk, including whether there are any potential issues with the:
- Counterparty Profile
- Business Purpose/Economic Substance
- Nature of the Transaction or Product
- Structure and Terms of the Transaction or Product
- Industry and/or Sector
- Environmental and/or Social considerations
The Guidelines also include detailed criteria for the consideration of certain industries (such as defence equipment, pornography, betting and gambling) and matters with environmental and/or social considerations.
Deutsche Bank’s Reputational Risk Framework
Deutsche Bank introduced a revised Framework to manage reputational risk in 2015 which embodies the Bank’s 3 Lines of Defence principles. The Framework is in place to manage the process through which active decisions are taken on matters which may pose a reputational risk and in doing so to prevent damage to Deutsche Bank’s reputation wherever possible.
The Framework requires Units1 to establish their own process through which reputational risk matters are initially assessed, ensuring accountability and ownership within the 1st Line of Defence. Matters may then be referred to the 2nd Line of Defence through one of four Regional Reputational Risk Committees which have been established (Germany, Americas, APAC and EMEA), as sub-committees of the Group Reputational Risk Committee, with responsibility for ensuring the oversight, governance and coordination of the management of reputational risk within their respective regions.
Matters may also be referred to the Group Reputational Risk Committee which has been delegated responsibility for the management of reputational risk at DB by the Group Risk Committee, a sub-committee of the Management Board.
1The term Unit refers to any of DB’s Business Divisions, Infrastructure Functions or Regional Management at all levels.