Our current risk landscape and key risk drivers
We operate predominantly in Western Europe, where there is a well-developed business culture, and we have a large number of plants reducing the potential impact should a problem occur in a specific plant. However, the risk landscape is changing and becoming more complex in both our internal and external environment.
We face new internal challenges to the success of our new business strategy, for which we need to have the right capabilities in place regarding people, systems and processes. We are seeing growing uncertainty in Europe with rapidly changing political environments and increased volatility in markets and exchange rates. In addition, Brexit exposes us to a high level of uncertainty and will inevitably impact our business if the UK completely breaks from the EU and loses the access to the single market.
There is an increased demand for quality standards and practices driving and increasing laws and regulations, which we need to adopt in an efficient and effective manner to keep our leading position in our markets. We therefore need to remain flexible and take a proactive approach in managing risks. We are improving our risk management processes and have set ourselves the goal of reaching an optimised level where we see risk as an ‘uncertainty' consisting of both an opportunity and a threat, and where we turn risk into business value.
Risk management processes
During 2016, we have focused on the improvement of our risk management processes (outlined in diagram below), as well as the tools and guidelines available in the business to support this goal. We want to ensure that the risk management processes will support the successful delivery of growth opportunities whilst protecting existing business value. At the same time, we want to ensure risk management processes help with the anticipation of, and offer a proactive response to, risk.
To support this, we have put in place a network of Risk Management Champions across all businesses and functions. The Champions were trained in fundamentals of risk management in two-day workshops and they now hold a recognised certificate in the Institute of Risk Management's Fundamentals of Risk Management course.
In addition, across all our businesses, we have offered an improved set of tools and techniques to support the identification, evaluation and management of risks. Further developments are planned for 2017, including the implementation of a web-based risk management system to allow for further consistency in risk information and more efficient consolidation and analysis throughout the organisation.
Risk appetite and culture
Our risk appetite and culture determine how we take decisions related to risk. The Board is responsible for setting the amount of risk the company is willing to bear. It then approves the business strategy and cascades it down to the organisation by setting the Group's delegation of authority limits and approving Group policies and procedures (including the risk management policy). The overall risk appetite set by the Board is as follows:
- Zero tolerance towards compliance risks
- For corporate responsibility risks which are beyond compliance to laws and regulations tolerance is as low as reasonably practical
- For business risks tolerance level is set by the hurdle rate of 15%
Our Vision, Mission and Values complement and drive the characteristics of our culture. We maintain an open style of communication, identifying any problems and issues early so appropriate action can be taken quickly to minimise any impact on the business. Our Group intranet, the Berendsen Universe, which provides an extensive platform for our employees to keep updated with latest news, key Group policies and procedures and to share best practice with others, helps to support our open style culture.
In addition, in 2016 we implemented a web-based incident reporting system which has increased the reporting of issues related to health and safety, business continuity, environment etc. This is allowing us to gain valuable insight on areas which need further control strengthening, and ultimately reduce our risk exposure.