Governance of crisis management

The Group has a crisis management framework and robust governance processes in place to enable the effective management of crises. The crisis management framework includes the implementation of global and regional Crisis Assessment Teams (CAT) and Crisis Management Teams (CMT), consisting of representatives from senior management and specialist functions from across the firm. The Global CAT assesses the impact of a specific crisis event on the firm on a global level and provides recommendations for final decisions to the Global CMT, whose members include all members of the Executive Board. In the case of a specific crisis event, firm-wide business continuity management response measures are triggered and overseen by the Executive Board. At the Board level, oversight of business continuity management is within the responsibility of the Risk Committee. In any given crisis event, the Board may delegate certain responsibilities to a sub-committee of its members that is authorized to take actions that exceed the mandate of the Executive Board, in particular when decisions are needed in too short a time frame to convene the full Board.

In February 2020, in response to the COVID-19 pandemic in countries and regions in which the Group operates, the Executive Board invoked our crisis management process, which remained in place throughout 2021. The crisis management process and related measures were continuously monitored and adapted throughout 2021 and early 2022, in light of changing circumstances, with continued Executive Board engagement. While specific crisis reporting was also developed during the initial phase of the pandemic, with frequent updates provided to regulators and the Board, reporting to the Board throughout 2021 and early 2022 became integrated into the Board’s normal meeting cycle, with an update on COVID-19 provided as part of the CEO’s regular reporting to the Board. Updates include information such as employee infection rates, the percentage of staff working from home in different locations, and any interruptions to operations or other incidents.

In March 2021, the Board approved the activation of the tactical crisis committee as a sub-committee of the Board, consisting of the Chairman and the Chairs of the Audit Committee, Risk Committee and Conduct and Financial Crime Control Committee, for the purposes of exercising close oversight and timely decision making in connection with the SCFF matter. The tactical crisis committee had originally been established in the early phase of the COVID-19 pandemic to monitor capital and liquidity developments in a period of extreme market volatility. The remit of the tactical crisis committee was expanded at the end of March 2021 to include oversight of the issues around the failure of Archegos to meet its margin commitments, which resulted in significant losses in the Investment Bank. To identify the underlying issues that led to the problems surrounding the SCFF and Archegos matters and recommend remediation measures, the Board commissioned two independent external investigations. The investigation into the Archegos matter was concluded in July 2021, and the full report of findings prepared by the external law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP and its expert advisors was published on our website. The report for the SCFF matter has also been completed, the findings have been made available to the Board and the report was shared with FINMA. In light of the ongoing recovery process and the legal complexities of the matter, there is no intention by the Board to publish the report. Following the election of Antonio Horta-Osório as Chairman at the 2021 AGM, the tactical crisis committee was further expanded to oversee a comprehensive Group-wide risk review initiated by the then Chairman and in line with the expectations of FINMA. The tactical crisis committee met frequently throughout 2021, initially on a weekly basis and later bi-weekly. In addition to the committee members, meetings were usually attended by the CEO, CCO, CFO, CRO and the General Counsel, as well as an external legal advisor. The comprehensive Group-wide risk review was concluded prior to year-end, and the results were reported to FINMA. In early 2022, the Board determined that the tactical crisis committee had served its purpose and retired the committee, after determining how to implement continued oversight, with the topics and initiatives that require ongoing monitoring shifted to the relevant governance that require ongoing monitoring shifted to the relevant governance bodies at the Executive Board and/or Board level.

In February 2022, the Executive Board invoked the crisis management process due to the escalating military conflict between Russia and Ukraine. Key priorities in this respect include taking measures to protect the safety and security of impacted staff, assessing and implementing the different sanctions and close monitoring of potential business interruptions and increased cyber threats.