Risk is an inherent part of conducting global business, and managing risk is fundamental to the way we work. Through robust programs, including Enterprise Risk Management, Compliance and Audit, we engage across the enterprise to identify, prioritize and manage risks.
Enterprise Risk Management and our enterprise strategy are linked. To better inform our decision-making, we evaluate risks at the business unit and enterprise levels, considering the likelihood and potential impact of each risk. These evaluations guide our approach for risk management, allow us to understand the challenges these risks bring, and position our business for the opportunities they present.
We consider risks across many categories, including strategic, operational, financial, compliance and hazard risks. We embed ESG risks into each risk category as part of our commitment to sustainability. We treat these ESG risks with the same priority and rigor as other risks across the business.
In 2022, Caterpillar conducted its first global climate scenario analysis to identify climate-related risks and opportunities, as summarized in our TCFD report. The results from this analysis are informing the Enterprise Risk Management process for 2023 to further integrate climate-related risks into our evaluations.
As risk management is fundamental to our culture, there is strong engagement in risk management from the CEO, executives and senior leaders. The company’s officers share accountability for business risks, and the board of directors has oversight of the enterprise process. The board and its committees also oversee risk and have regular updates on topics that are identified through the risk management process. Outputs from risk management drive strategic initiatives and disclosures.
Our risk management culture enables us to critically evaluate risks to our business and identify opportunities to create value for our employees, customers and shareholders. Our commitment to sustainability is reflected in our risk management practices as we strive to build a better, more sustainable world.
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