Risk Review

The Board has two main responsibilities in relation to risk.

One is to determine the risk appetite and communicate to the organisation what constitutes acceptable risk-taking. The second responsibility, which is delegated to the Audit Committee, is to oversee the management process for the identification, assessment and mitigation of risk across the Group.

A Group Risk policy is in place which supports the Board in fulfilling those responsibilities and serves to reinforce the risk review processes embedded within the businesses.

The Board is of the view that a rigorous ongoing process for identifying, evaluating and managing significant risks faced by the Company was in place throughout 2012 and up to the date of approval of the Annual Report for 2012.

During 2012 the Board undertook a detailed exercise to consider the Group’s risk appetite in a number of key areas. This exercise was undertaken in addition to the evaluation, monitoring and mitigation of the key risks facing the Company which is undertaken as part of the risk management processes. The risk appetite established by the Board provides clarity on those areas where the Board wishes to take little or no risk and those where the Board would be comfortable adopting a greater level of risk taking. It is intended that this assessment will be used to support the Board’s ongoing decision making and underpin the risk management processes across the Company. Risk appetite will change over time to reflect changes in the economic environment, strategy and the performance of the Company and it is the intention of the Board to review this at least on an annual basis in conjunction with its strategic and financial planning processes.

The Company has an established process for the development of risk practices. Further to the setting of the risk appetite by the Board there is a more formal method of defining acceptable levels of risk within the organisation. The risk process has evolved and is validated through the preparation of risk registers which are used to assess risk tolerances and the registers are reviewed and discussed by the Group Management Committee prior to being put forward to the Audit Committee on a semi-annual basis.