Page 49 - Consolidated Non Financial Statement

Banca Ifis

| 2020 Consolidated Non-Financial Statement
Reputational risk
Banca Ifis monitors and protects its reputation as well as that of the Group's companies.

To assess the level of reputational risk, the Group conducts an annual Risk Self Assessment taking into consideration
both internal and external factors that could potentially negatively impact the reputation of the Group and the
stakeholders concerned from time to time.

The main internal factors include the materialisation of operational risk or other risks not adequately monitored (e.g.:
market, liquidity, legal, strategic risks), the violation of laws and regulations and corporate governance rules (such as
the Code of Ethics), an ineffective or incorrect management of internal or external communication, and the conduct of
management, employees, and collaborators.

External factors can refer to comments and discussions in the media and on social networks, blogs, or other digital
communication tools concerning information or opinions detrimental to the reputation of the Group or its companies.

Reputational risk can affect different kinds of stakeholders. For instance:

• Customers: potential erosion of trust in the Bank and Group because of, for instance, inefficient operational
practices or sales abuses;
• Depositors: potential erosion of trust in the Bank and Group, causing customers to withdraw part of their
deposits;
• Employees and collaborators: decline or loss of trust in/respect for the company among employees and
collaborators;
• Shareholders and investors: decline or loss of trust in/respect for the company among shareholders and
market participants because of, for instance, the alleged inability to deliver satisfactory results, conduct
inconsistent with ethical standards, perceived lack of managerial integrity, etc.;
• Local community and society: local community and society: decline or loss of trust in/respect for the company
among local communities and opinion makers;
• Supervisory Authorities: decline or loss of trust in/respect for the company among Supervisory Authorities
due to omissions or negligence deriving from the failure to comply with legal and regulatory obligations;
• Suppliers and counterparties: decline or loss of trust in/respect for the company among suppliers and
counterparties.

In addition, the Group has defined a set of indicators that can promptly identify the presence of vulnerabilities in
the exposure of the Bank and its subsidiaries to reputational risks, as well as the relevant warning and alarm
thresholds where necessary. These indicators regard, for example, the percentage incidence of negative comments
recorded on the various social accounts of Banca Ifis and the Subsidiaries, as well as articles with negative sentiment
published by the press and on-line media; the change in the complaints received or lawsuits initiated by customers or
employees against the Bank and other Group companies; the customer turnover rate.

Through constantly monitoring these aspects, if the predefined thresholds are violated, it considers from time to time
whether to take any mitigating action.

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