Company: BCDRF
Filing Date: 2025-02-28
Form Type: 20-F
Source: 0000891478-25-000054
Chunk: 589

Company: Banco Santander, S.A.
Filing Date: 2025-02-28
Form: 20-F
Chunk 589
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 risk has three key components:

| 1 |     | Business model risk, which includes the risk of the model being out of date, becoming irrelevant and/or losing its capacity to continue generating the desired results.                                                                                                                                                              |
| 2 |     | Strategy design risk, which relates to the strategy and assumptions set out in the Group’s long-term plan, considering that this plan may be unsuitable in its nature or because of its assumptions, which could result in the Group not achieving the expected results.                                                             |
| 3 |     | Strategy execution risk, which involves the three-year strategic plan and potential deviations from it due to internal and external factors, the lack of capacity to respond to changes in the business environment and the risks associated with corporate development transactions and the marketing of new products and services. |

8.2 Strategic risk management Our strategy and business model pillars are customer focus, our global scale with local presence, and geographical, business and product diversification. Our five global businesses are key to driving more value creation, profitability and shareholder remuneration, while helping us maintain a solid and diversified balance sheet thanks to our prudent risk management. Grupo Santander views strategic risk as a transversal risk. We therefore have an operating model, to which the Group's subsidiaries refer to, that covers the governance, procedures and necessary tools for robust monitoring and control, all within our board-approved risk appetite.

We constantly monitor changes in competition, regulation, market conditions, our organization and other areas to determine the existence of mitigating factors, as well as action plans and the potential need to revise our strategy. The Strategic Risk function engages with key areas of the first and second lines of defence to ready mitigating measures for implementation when necessary. Our strategic risk operating model is based on: • Challenging strategic plans: With the support of other specialized areas within the Risk division, the Strategic Risk team challenges the three-year financial plan and long-term strategic plan by identifying potential threats that could undermine our objectives. In 2024, we bolstered this by defining a set of binding constraints that we embedded in the Group's three-year plan as well as by fully integrating our five global businesses into this process. • Emerging risks: Santander proactively identifies, measures, monitors and manages risks that, under stressed scenarios, could have a significant impact on the Group's profitability, liquidity and solvency. In 2024, we updated the methodology we use to identify and assess these risks by enhancing its foresight component. For more details on the emerging risks we