Strategic report Governance Financial statements Other information RISK MANAGEMENT AND THE PRINCIPAL RISKS AND UNCERTAINTIES Excellent client service EVALUATING AND MANAGING RISKS CONTINUED Client proposition and engagement Taxonomy Level 1 Strategic Taxonomy Level 2 Ineffective business strategy Owner: Risk Mitigation and controls Key risk indicators Chief Executive Officer Risk that HL does not align propositions and •The Executive team and Board review strategy • NNB v forecast Link to strategy: activity with HL’s strategic objectives. •Dedicated proposition/client experience team • Net Ease Scores is in place • Client retention Potential impact •Testing of propositions with clients and • Service rating • Erosion of shareholder value potential clients • Complaints • Negative impact on achievement of AUA •Product governance process • Risk events and client number strategic targets •Regular client experience reviews by Link to HL values: Negative impact on our reputation as an Put the client first, do the right • the Executive 2020/21 activity thing, make it easy innovative market leader •An Operational Plan is in place prioritising • Launched additional Segregated Mandates in HL development Fund Managers 2020-2021 Change Launched Active Savings Cash ISA • STABLE • Investment Pathways • Faster Payments • ESG review resulted in the addition of two new responsible investment fund options to the Wealth Shortlist Taxonomy Level 1 Strategic Taxonomy Level 2 Market dynamics/landscape Owner: Risk Mitigation and controls Key risk indicators Chief Financial Officer Risk that HL revenue is adversely affected by •Diversified revenue streams • Interest rates Link to strategy: market levels impacting strategic expectations, •The Group’s business model comprises • FTSE 100 resulting in erosion of shareholder value. both recurring platform revenue and • Business Management Information (incl. service transaction-based revenue performance, productivity & trading volumes) Potential impact •Monitoring of client service, satisfaction data • Client metrics (Net, new and retention) • Reduced AUA and AUM •Executive Committee, Treasury Committee and Link to HL values: • Negative impact on HL revenue Finance Reporting 2020/21 activity N/A •Liquidity policy and associated controls oversight • Marketing Campaigns • Prioritisation for internal investment on service, 2020-2021 Change technology and risk INCREASING • Ongoing discussion in the Executive Committee •mes at times of market volatilitySurge in share dealing volu • Significant rise in markets post Vaccine Monday • Drop in net interest income following interest rate reductions and yield curve decline 54 Hargreaves Lansdown Report and Financial Statements 2021