The group’s risk management system is designed to manage - rather than eliminate - the risk of failure to achieve business objectives. There is a continuous process in place for identifying, assessing, managing, monitoring and reporting on the significant risks faced by individual group companies and by the group as a whole. This process has been in place for the year under review up to the approval of the annual report and accounts. The group’s risk management system is subject to regular review to ensure compliance with the Code and the Financial Reporting Council guidance to directors on internal control and risk management (the FRC Guidance). The Financial Reporting Council has recently updated the provisions of the Code on risk management and internal control and has published new guidance. The revised Code and new guidance do not apply to SABMiller in respect of the year under review but apply in respect of the current year.
Excom has specific responsibility for implementing the group’s system of risk management and views the careful and appropriate management of risk as a key management role. It reviews our significant risks and subsequently reports to the board on material changes and the associated mitigating actions. Reviews of the effectiveness of the risk management system were carried out by excom in April and October 2014 and in March 2015, and reported to the audit committee.
Enterprise-wide risk management
Managing business risk to deliver opportunities is a key element of all our business activities, and is undertaken using a practical and flexible framework that provides a consistent and sustained approach to risk evaluation. Business risks, which may be strategic, operational, financial, environmental, reputational, are understood and visible. The business context determines in each situation the level of acceptable risk and controls.
Key features of our system of risk management are:
- group statements on strategic priorities, purpose, values and ethics;
- clear business objectives and business principles;
- an established risk policy;
- a continuous process for identification and evaluation of significant risks to the achievement of business objectives;
- management processes to mitigate significant risks to an acceptable level;
- continuing monitoring of significant risks and internal and external environmental factors that may change our risk profile; and
- a regular review of both the type and amount of external insurance purchased, bearing in mind the availability of cover, its cost and the likelihood and magnitude of the risks involved.
In addition to excom’s bi-annual reports to the board on key risks, there is a process of regular reporting to the board through the audit committee on the status of the risk management process. Strategic planning, internal audit and other risk control specialist processes are integrated into line management’s risk processes and simplified risk reporting.
Key reports include those that identify, assess and monitor strategic, financial, reputational and operational risks in each country, division and on a group basis.