Risk Management

Through robust programs, including Enterprise Risk Management, Compliance and Audit, we engage across the enterprise to identify, prioritize and manage risks.

Enterprise Risk Management and our enterprise strategy are linked. To better inform our decision making, we evaluate risks at the business unit and enterprise levels, considering the likelihood and potential impact of each risk. These evaluations guide our approach to risk management, allow us to understand the challenges these risks bring and position our business for the opportunities they present.

We consider risks across many categories, including strategic, operational, financial, compliance, hazard and sustainability/climate risk categories. Sustainability and climate risks continue to be considered in connection with other risk categories as well. We treat these sustainability and climate risks with the same priority and rigor as other risks across the business. For example, the results from the global climate scenario analysis Caterpillar completed in 2022 and summarized in its TCFD report were integrated into the Enterprise Risk Management process.

As risk management is fundamental to our culture, there is strong engagement in risk management from the CEO, executives and senior leaders. The company’s officers share accountability for business risks, and the board of directors oversees the enterprise process. The board and its committees also oversee risk and have regular updates on topics that are identified through the risk management process. Outputs from risk management drive strategic initiatives and disclosures.

Our risk management culture enables us to critically evaluate risks to our business and identify opportunities to create value for our employees, customers and shareholders. Our commitment to sustainability is reflected in our risk management practices as we strive to build a better, more sustainable world.