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Risk management is the responsibility of the Board and is a key factor in delivering the Group’s strategic objectives

The Board is responsible for setting the risk appetite, establishing a culture of effective risk management and for ensuring that effective systems and controls are in place and maintained.

Senior managers take ownership of specific risks and implement policies and procedures to mitigate exposure to those risks.

RISK MANAGEMENT PROCESSplus

The risk management process sits alongside our strong governance culture and effective internal controls to give the Board assurance that risks are being appropriately identified and managed.

Risk Management Process

HOW WE MANAGE RISKplus

Risk is managed across the Group in the following ways:

  • The Board meets annually to review strategy and set the risk appetite.
  • Risks faced by the Group are identified during the formulation of the annual business plan and budget process, which sets objectives and agrees initiatives to achieve the Group’s goals, taking account of the risk appetite set by the Board.
  • Senior management and risk owners consider the basic cause of each risk and assess the impact and likelihood of it materialising. The analysis is documented in a risk register, which identifies the level of severity and probability, ownership and mitigation measures, as well as any proposed further actions (and timescale for completion) for each significant risk.

Risks are then logged with reference to impact and probability as follows:

  • The Executive Directors meet with senior managers on a regular basis throughout the year. This allows the Executive Directors to ensure that they maintain visibility over the material aspects of strategic, financial and other risks.
  • The Group’s Executive Directors also compile their own risk assessment, ensuring that a top-down, bottom-up approach is undertaken when considering the Group-wide environment.
  • The Group’s Executive Directors also compile their own risk assessment, ensuring that a top-down, bottom-up approach is undertaken when considering the Group-wide environment.

In order to further enhance the risk management process, the Group has recently established an executive Risk Management Committee, chaired by Michael Scott. It is intended that this committee will meet on a regular basis (generally monthly). The most significant risks will be reviewed at each meeting, with other risks reviewed on a cyclical basis.

Risk MatrixRisk Matrix

INTERNAL CONTROLplus

In addition, Eurocell has a well-defined internal control system.

The Group has a process of planning and monitoring, which incorporates Board approval of operating and capital expenditure budgets. Performance against the budget is subsequently monitored and reported to the Board on a monthly basis. The Board also monitors overall performance against operating, safety and other targets set at the start of the year. Performance is reported formally to shareholders through the publication of results. Operational management makes frequent reports on performance to the Executive Directors.

The Group also has processes in place for business continuity and emergency planning.

Day-to-day operations are supported by a clear schedule of authority limits that define processes and procedures for approving material decisions. This ensures that projects and transactions are approved at the appropriate level of management, with the largest and most complex projects being approved by the Board. The schedule of authority limits was updated in December 2016, to reflect the development of the business since its IPO, and approved by the Board.

In order to further enhance the internal control and risk management processes, the Group intends to implement an outsourced internal audit function. An appointment to fulfil this role will be made in March 2017.

With the assistance of the Audit and Risk Committee, the Board has reviewed the effectiveness of the system of internal control. Following its review, the Board determined that it was not aware of any significant deficiency or material weakness in the system of internal control.

RISK PROFILEplus

The principal risks monitored by the Board can be found on pages 38 and 39 of the 2016 Annual Report.

 

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