Mapping our key risks

Key threats to our risk profile

Threats with uncertain impact, probability and timeframe could impact the Group. We continuously monitor internal and external environments to identify new and emerging risks. We then analyse each risk and, if needed, develop and apply mitigation and management plans. The external threats that are currently the focus of attention are largely covered under our key risks including the Strategic risk summary which has been included in 2016. The most material threats to our risk profile in addition to these are:

  • the UK’s exit from the European Union
  • the impact of global terrorism.

We have had a significant presence in the EU outside the UK for many years, including a substantial operation in Luxembourg from where we manage our global fund range which is sold across the continent. Although we continue to review our legal and regulatory structure across continental Europe, Brexit is not expected to have a material impact on our business or the service we provide to our clients and investors.

Key risks

We have identified the following as the key risks to Schroders.

Assessment of key risks

The key risks outlined in chapters Strategic risks, Business risksMarket, credit, liquidity and capital risks, and Operational risks have been assessed in the light of the current environment, as summarised in the diagram below.

This year we have made the following changes to the presentation of our key risks:

  • Addition of a Strategic Risk category, recognising the external risks facing the group, comprising Changing investor requirements, Low investment return environment, Fee attrition, Regulatory landscape and Business model disruption
  • Reputational risk (previously a standalone risk category) has been moved to the Business Risk category
  • Removal of the Global Business risk from our Business risks category as we consider an emergence of this risk will be captured in an Operational Risk failing.

The horizontal axis shows the impact of a key risk if it were to materialise. The vertical axis shows the likelihood of this occurring. The scales of each axis are set on a relative basis between each risk and are based on the residual risks. The Group undertakes additional work to address those risks that it considers to be potentially heightened, more costly or in excess of our risk appetite. In some areas we have seen increased levels of risk, which we continue to actively manage.

Please click on the circled numbers.

Changing investor requirements Low investment return environment Fee attrition Regulatory landscape Business model disruption Reputational risk Investment performance risk Product risk Business concentration risk9 Market risk Cedit risk Liquidity risk Risk of insu cient capital Conduct and regulatory risk Legal risk Tax risk Process and change risk Fraud risk Technology risk and information security People and employment practices risk Third-party service provider risk Brexit Global Terrorism

Strategic risks

  • 1. Changing investor requirements
  • 2. Low investment return environment
  • 3. Fee attrition
  • 4. Regulatory landscape
  • 5. Business model disruption

Business risks

  • 6. Reputational risk
  • 7. Investment performance risk
  • 8. Product risk
  • 9. Business concentration risk

Market, credit, liquidity and capital risks

  • 10. Market risk
  • 11. Credit risk
  • 12. Liquidity risk
  • 13. Risk of insu cient capital

Operational risks

  • 14. Conduct and regulatory risk
  • 15. Legal risk
  • 16. Tax risk
  • 17. Process and change risk
  • 18. Fraud risk
  • 19. Technology risk and information security
  • 20. People and employment practices risk
  • 21. Third-party service provider risk

Key threats to risk profile

  • A Brexit
  • B Global Terrorism

* See glossary.