The Risk Committee has oversight of climate-related risks and opportunities through its responsibility for the governance of TORM's enterprise risks, which includes climate-related risks and opportunities. The Risk Committee is composed solely of independent Non-Executive Directors. The Risk Committee meets three times a year at a minimum and is a permanent committee reporting to the Board of Directors. The Audit Committee has oversight of financial reporting, external audit, internal controls, and risk management. It also oversees non-financial reporting, including the annual sustainability report. The Board of Directors approves TORM's quarterly financial results and annual sustainability report. The Senior Management Team has overall management responsibility for climate-related risks and opportunities at TORM. The Senior Management Team responsible for the development of TORM's ESG strategy and reporting. The Head of External Reporting monitors new ESG-related regulatory requirements and develops initiatives to ensure that TORM complies with stakeholder expectations. Strategies to explore and develop business opportunities both related to customers, brokers, and industry stakeholders, and further energy efficiency technologies to increase decarbonization on commercially viable terms are led by the Head of Commercial Decarbonization and the Head of Technical Decarbonization. Risks related to climate change are incorporated into TORM's Enterprise Risk Management process and the annual Enterprise Risk Management Report. [...] The climate-related risks identified through the scenario analysis exercise has been incorporated into TORM's annual Enterprise Risk Management (ERM) during which the critical risks which TORM is facing were identified, assessed, and discussed by TORMs Senior Management Team and included in the Enterprise Risk Management Report delivered to the Risk Committee. The Enterprise Risk Management Report sets the tone for risk management in TORM and indicates how risk management supports TORM's strategy. The Enterprise Risk Management Report includes TORM's definitions of risk and risk management, the risk management objectives, the risk approach and philosophy as well as the various responsibilities and ownership for risk management within TORM. TORM prepares an internal Enterprise Risk Management Report which assesses risks as per their financial, reputational and compliance impact. For climate-related risks and opportunities, we define the types of risks by using the TCFD guidance for transition and physical risk categories. The Risk Committee assists the Board of Directors in fulfilling its responsibilities relating to the oversight of the quality and effectiveness of the companywide risk management program including strategic, operational, compliance, HSSE-related, financial, credit, market, reputational and other risks. The full [terms of reference for the Risk Committee are available at: TORM - Investor - Governance - Governance Documents and Policies](https://www.torm.com/investor/governance/governance-documents-and-policies/default.aspx) The risk of substitution of oil for other energy sources will most likely have a negative impact on the tanker markets. TORM manages this market risk through reports to the Risk Committee on the development of "disruption indicators" which function as warning signs as to whether the strategy needs to be reconsidered. Indicators are adjusted when appropriate. Disruption indicators are a reoccurring agenda item at all Risk Committee meetings. TORM also manages its climate risks through membership of industry bodies such as the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping, where we work with industry partners, hereunder Danish Shipping, and knowledge specialists to achieve zero carbon shipping by 2050. In addition, TORM is an active member of industry organizations such as the Getting to Zero Coalition and Danish Shipping. Throughout the year, specialists across TORM interact with our customers and other stakeholders (including employees, community, suppliers, investors, and authorities) to ensure an open dialogue. This includes our ongoing dialogue with financial institutions to ensure a high level of transparency in our climate efforts – both ashore and at sea. On a day-to-day basis, TORM manages policy and legal risks by monitoring regulatory developments in the markets where it operates, and in particular with regard to the EU's FuelEU Maritime Initiative and proposal to include shipping in the emissions trading scheme (ETS), as well as the IMO's Initial Strategy for international shipping which seeks to reduce greenhouse gas (GHG).