We use a framework to manage the risks that could occur in our business. This ensures that we identify and understand risks, assess them properly and deal with them effectively.
We have tailored our risk management to enable our business objectives to be achieved by balancing risks and opportunities. At the same time, we’re committed to meeting our obligations to our people and the societies in which we operate.
We want to make our people aware of risk. But we also want to encourage a more entrepreneurial attitude towards the opportunities and rewards that can come out of it.
More specifically, our risk management framework gives us:
- The necessary insight into the risks facing the company
- A common risk language, making it simpler to communicate and take decisions
- Clarity about internal and external risk boundaries that determine freedom of action or choice in terms of taking and accepting risk
- A management review and reporting process to monitor the framework’s effectiveness
- A way of getting line management to report annually on compliance with this policy
- A clear accountability and governance structure regarding risk management.
Clarity on risk appetite, along with the boundaries that determine the freedom of action or choice in terms of risk taking and risk acceptance, is provided to all managers. Risk boundaries are set by our strategy, Code of Conduct, core values, authority schedules, policies and corporate directives. Our risk appetite differs per objective area and type of risk:
Strategic: In pursuing our strategic ambitions, we are prepared to take considerable risk related to achieving our performance, innovation and sustainability objectives. Return on investment in the development of innovative products and sustainable solutions are never certain. However, considerable funds and effort are spent on research, development and innovation, even in less certain economic circumstances.
Operational: With respect to operational risks, we seek to minimize the downside risk from the impact of unforeseen operational failures within our businesses.
Financial: With respect to financial risks, we have a prudent financing strategy and a strict cash management policy and are committed to maintaining a strong investment grade credit rating. Our financial risk management and risk appetite are explained in more detail in the consolidated financial statements of our most recent annual report.
Compliance: We do not permit our employees to take any compliance risk and we take appropriate measures in the event of any breach of our Code of Conduct. See the governance and compliance pages of our most recent annual report for more details.