The board is responsible for the amount of risk that the group is willing to take. The board fulfils this responsibility when it agrees and sets the business strategy and cascades it down to the organisation by setting the group's delegation of authority and approving group policies and procedures. This enables the group to reduce risks, where possible, to the tolerance levels set by the board.
Risk appetite and inherent attributes
The board considers the inherent risk attributes of our business, highlighted below, when identifying its appetite and tolerances for risk and opportunities.
- We have an open communication culture where it is normal practice to escalate issues promptly;
- We operate predominantly in Western Europe, which has a well-developed business culture;
- We have a stable and experienced management team;
- The group operates a large number of plants, and this reduces the potential impact on our business should problems occur in a specific plant; and
- Our organisation is strongly process-oriented.
We operate within a low risk tolerance in respect to strategic objectives associated with corporate responsibility, and with a marginally higher tolerance towards our financial strategic objectives.
We maintain an open style of communication. This is designed to identify any problems and issues early so that appropriate action is taken quickly to minimise any impact on the business.
The characteristics of our group culture are supported by our group intranet, the Berendsen Universe. This provides an extensive platform for our employees to keep updated with the latest news, key group policies and procedures and to share best practice with others. Our Vision, Mission and Values complement and drive the characteristics of our culture.
Identification, evaluation and management of principal risks
The board is responsible for identifying the principal risks that face the group. Throughout 2015 and up to the date of the approval of our financial statements, there has been an ongoing process through which the board reviewed the most significant risks facing the group including the identification and evaluation of potential new risks. In addition, there has also been a process through which the audit committee has regularly monitored the management of these risks.
The board has responsibility for maintaining sound risk management and internal control systems, and reviewing the effectiveness of these systems at least annually. Our internal control systems are designed to manage rather than eliminate the risk of failing to achieve a business objective. They can therefore only provide reasonable and not absolute assurance against material misstatement or loss.
Operational Risk Management Group
The Operational Risk Management Group aims to improve our systems and procedures in order to share risk management best practice around the group. This group, which comprises several senior managers from across our organisation, meets at least twice each year to discuss emerging risk management issues and to identify opportunities for us to share best practice.
In response to the new business strategy and, in particular, to the new business line structure, the terms of reference and membership of the group will be reviewed in 2016 to ensure it remains fit for purpose and aligned to our organisation.