United Bank is continuously working to enhance risk management strategies, measurement tools, and strategic opportunities related to climate. Climate has been incorporated into our annual Corporate Strategic Plan as part of our overall Environmental, Social and Governance (ESG) priorities. We have a Climate Working Group dedicated to advancing the Company’s program and preparing the institution for anticipated regulatory requirements.

Climate Governance

The core elements of a successful environmental climate governance program – strong risk management and planning for long-term sustainability – are at the core of what United and its leadership do every day. The Board of Directors has ultimate oversight of the Company’s climate related practices and initiatives. The Board has tasked the Governance & Nominating Committee with monitoring the Company’s progress and efforts for ESG as a whole. The Board Risk Committee has oversight of ESG-related items that are incorporated within the enterprise risk management program. This includes climate-related risk, information security, customer due diligence, complaint management, legal and reputational risk, and fair and responsible banking.

As part of their oversight of the entire ESG program, the ESG Management Committee sets the strategy for identifying climate-related risks and pursuing climate-related opportunities. They ensure the institution is moving at the right pace to advance the overall climate program and update the Board and its Committees as needed.

United also established a Climate Working Group that is responsible for executing the climate strategy. It is sponsored by our CFO and CRO. The multidisciplinary team includes leaders from credit risk, operational risk, treasury, accounting, analytics, and corporate social responsibility. These managers provide broad perspective on implications of climate risk for the institution. They educate themselves and one another on industry best practices and emerging climate-risk resources. They assess the Company’s readiness for anticipated regulatory requirements and continuously incorporate climate risk analysis within their own scope of work.

Climate-related Risk Management

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Identifying and Prioritizing Climate-Related Risk

The Climate Working Group plays an important role in identifying and prioritizing climate-related risk. Furthermore, business line leaders who are responsible for operational risk assessments receive training on climate-related risks. This training equips them to incorporate climate into the risk identification and prioritization process. Thus, climate risks are prioritized based on their residual risk rating relative to other risks the business faces. The training uses the climate risk taxonomy that is outlined by the Task Force on Climate-Related Financial Disclosures (TCFD) as a first step in integrating that framework into our overall enterprise risk management program.

We are currently enhancing capabilities to identify existing and emerging climate-related risks, in addition to determining how we will define short, medium, and long-term time horizons.

The Board of Directors is responsible for defining the level and type of risk that United is willing to take and ensuring it remains in line with our strategy. Risks and opportunities are assessed by defined values, then prioritized by predetermined target risk levels and tolerance thresholds. United’s risk management team develops risk appetite statements and works with business lines to identify correlating key risk indicators and tolerance thresholds. Climate has been incorporated into our risk appetite statement and we are working with business lines on identifying the appropriate, correlating risk statements, key risk indicators and tolerance thresholds.

However, we recognize that in many cases, clear data is not yet currently available. United considers the existing and emerging factors that impact the Company’s ability to manage climate-related risks and opportunities, such as strategic, credit, market, liquidity, regulatory, operational, technology and reputational. These are further outlined in this chart.


Managing Climate-Related Risks

United realizes acute and chronic physical risks associated with increasing extreme weather events and unpredictable patterns, as well as rising temperatures and sea levels, may have impacts throughout the Company and should be monitored and mitigated like other risks within the ERM framework. United has Business Continuity/Disaster Recovery Plans in place in case of business disruptions. Threat assessment surveys are completed across the Company’s geographic footprint to evaluate the likelihood and impact that events, including severe weather, may have on the Company. This process helps management understand what areas may have increased acute and chronic physical risks associated with severe weather patterns and ensure appropriate processes are in place to mitigate any potential impacts.

Controls are designed to ensure that risk strategies are carried out timely, effectively, and consistently throughout the Organization. United implements controls that prevent, detect, contain, or correct inherent risks. Controls include training, monitoring, and review activities, as well as automated controls such as those associated with systems and security. Concentration reports are closely monitored to avoid concentration risks that may lead to unexpected losses detrimental to the stability of the relevant business. Physical, transition and connected risks arising from climate change are considered as part of the wider risk management program.

Policies and procedures play an extensive role in ensuring employees understand day-to-day processes and support our overall risk profile. Company policies are formalized and ensure clear accountability, utilizing assessment tools, and designing effective controls into systems and critical business processes. To ensure that the risk strategy is followed, Risk Management may set policies, issue guidance and/or minimum standards. Risk Management supports the implementation of these policies and standards through the development and implementation of risk assessment monitoring tools that allow executive and senior management to understand where processes and controls are necessary, as well as where improvement may be necessary.

Strategies are determined based on the inherent and residual risk exposure, considered as a function of severity, occurrence, and control effectiveness. Risk mitigation strategies are categorized into avoiding, eliminating, accepting, reducing, sharing, or transferring. For each of the material risks identified, a strategy is determined by the lines of business in consultation with Risk Management.

Integrating Climate Risks into the Organization’s Overall Risk Management Program

United determined that incorporating climate-related risk into its existing ERM framework is the most effective way for our Company to manage climate risk. For example, the climate risk identification and prioritization process follows the same assessment process outlined here.

The Board Risk Committee, as part of its responsibilities overseeing enterprise risk, also assesses climate-related risk. Climate is included within our Risk Appetite Statement and related ERM programs. The Climate Working Group will continue to ensure climate risk management is integrated into applicable policies and practices and make recommendations for enhancing climate initiatives across the Institution.

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