The Board is committed to effective risk management in pursuit of the Group’s strategic objectives with the aim of growing shareholder value. The Board realises that proactive risk management is both an essential element of good corporate governance and an enabler in realising opportunities.
GOVERNANCE OF RISK MANAGEMENT
The Board is responsible for the governance of risk and is assisted by the audit and risk committee, which reviews and monitors the effectiveness of the risk management processes within the Group in accordance with corporate governance requirements. They ensure that the risk management process complies with the relevant standards and works effectively. The Board oversees the activities of the audit and risk committee, the Group’s external and internal auditors as well as the Group’s risk management function.
The Group complies with a risk management framework that was approved by the audit and risk committee to ensure that a best practice risk assessment approach is followed. The executive committee of the divisional subsidiaries and associate companies are accountable and responsible for managing risks within their business units and may delegate specific responsibilities appropriately. This process is evaluated by the internal auditors that provide the audit and risk committee with assurance that significant business risks are systematically identified, assessed and reduced to acceptable levels in line with the Board’s risk appetite.
OUR APPROACH TO RISK MANAGEMENT
The Group’s risk management approach continues to evolve, is flexible and relevant to the business needs in an ever changing environment. The audit and risk committee continues to assess, manage and report on all significant risks, the impact on the business and the mitigation of the risks. They also assess whether the risk process is effective in identifying and evaluating risks to determine whether the business operations have managed the risks in line with the Group strategy and to consider the impact on the sustainability of the business. The responsibility for monitoring the management of each of these risks is assigned to the executive committee of each business unit. The risks are then considered at a Group level through the monitoring process of the audit and risk committee.
Risk registers are tabled at each Company and subsidiary Board meeting under the categories of financial, operational, strategic, legal, human resources and other risk. Action plans are monitored and discussed to reduce the risks to acceptable levels. From the risk evaluation in the risk register, significant risks are reported to the audit and risk committee, who in turn reports these risks to the Board. The Board is able to oversee the risk management process at Group level.
Through a standardised approach across the AEEI Group, in the year ahead, we will strengthen the link between risks and opportunities. In doing so, this will maximise certainty between objectives, aspirations and outcomes as well as increase the performance of management to achieve a more effective risk process.
In applying the Group’s strategy, we will apply the risk management process which will inform the strategic choices we make. This will align the Group’s strategic objectives with the application of the risk management process to realise our expected outcomes.
The significant risks that currently impact the Group are: