With a mandate to help Canadian companies of all sizes go, grow and succeed internationally, including in more challenging markets, EDC needs to be expert at identifying, assessing and managing risk – both for our own viability and for that of our customers.
We embarked on a major enterprise risk management (ERM) transformation in 2015 to strengthen our risk management frameworks, policies and practices. The new ERM structure covers the entirety of the risk issues EDC encounters, and includes CSR risks such as climate, human rights, environmental impact, financial crimes, business governance and integrity. A detailed discussion can be found in our Management’s Discussion and Analysis.
With a significant amount of work completed over the last four years, our top priorities for 2019 were to accelerate the final stages of the ERM transformation, integrate changes into our daily operations and build a risk-aware culture.
EDC leaders set the tone at the top. For example, in monthly leader exchanges called “Connecting the Dots”, they shared how they’re working differently and contributing to a more risk-aware culture. Many contributed blog posts to our intranet to explain why risk management is every employee’s responsibility. For the first time, all employees had at least one risk management objective in their annual performance plans.
We also began to broaden the scope of activities that help exporters self-identify and manage their risks, producing a guide called Financial Crime in International Trade and posting articles to our ExportWise blog.
A key component of our ERM practice is an annual top-risk assessment. In 2019, we ran an iterative process with the Executive Management team to identify and rate enterprise risks of greatest concern, considering the financial, reputational, operational, compliance and shareholder impact, as well as the likelihood of occurrence. At the top of the list were information security risk, compliance risk and financial crimes risk – each of which has an associated mitigation plan, with progress reported to the Board on a quarterly basis.
Human rights, climate, environmental, corporate governance and other non-credit related risks can impact the sustainability and reputation of a business, the strength of relationships, and the well-being and integrity of individuals and communities. As an export credit agency, EDC has a responsibility to continuously adopt leading practices to address these types of risks to maintain the Canadian brand, protect Canadian companies, and mitigate risks to individuals and communities our exporters connect with through our support. See Protecting the environment and people to learn how we do this.
Tata Communications and EDC developed an action plan for preventing and mitigating human rights concerns.
EDC enjoys a long-standing relationship with Tata Communications, a digital infrastructure company with a large global footprint. Headquartered in India, Tata Communications has operations in Canada and a history of purchasing goods and services from Canadian exporters. Through a connection financing arrangement, EDC has been able to drive trade from Canada into the company’s supply chain in India and around the world.
Though it may not be obvious, companies in the information and communication technology (ICT) sector face CSR risks. These businesses have to navigate an increasingly complex world of risk, particularly in how personal information is used, or restricted, in the operations of global communication networks. Through their business relationship, both Tata Communications and EDC are exposed to these potential human rights–related risks.
During the due diligence process prior to EDC’s most recent transaction with Tata Communications, the Environmental and Social Risk Management (ESRM) team identified and discussed opportunities for Tata Communications to improve its capacity for managing such risks and brought them forward.
Together, Tata Communications and EDC developed an action plan for preventing and mitigating human rights concerns related to data privacy and freedom of expression.
The company’s commitments were embedded in our loan agreement and are closely monitored by the company and by our Corporate Lending and ESRM teams to ensure compliance.
“There’s no question that being able to provide constructive feedback and present best-practice examples through a series of sensitive discussions has deepened our relationship with Tata Communications,” said Nigel Selig, EDC Chief Representative, Asia. “What’s more, the two-way engagement has helped us better understand the realities and challenges faced by operators in the sector, and refine our own expertise and guidance accordingly.”