Risk is encountered as part of the pursuit of the Company’s strategic objectives which are established to create long-term value for all its stakeholders.
The Board has overall responsibility for the stewardship of risk management and for ensuring that the Company maintains the appropriate level of risk management to support the achievement of its strategic objectives. The Principal Risks faced by the Company could have a material adverse effect on its business, financial performance, or reputation, either alone or in combination, so the management of such risks through appropriate review, monitoring and control is important to the Company’s long-term sustainable success. Changes to the trading environment can also affect the likelihood and impact of risks and may give rise to new risks.
The Board is supported in its risk management responsibilities and in reviewing the effectiveness of the risk management framework by the Audit Committee and the Executive Risk Committee.
The Executive Risk Committee is advised by an external risk management specialist, and meets quarterly to assess the centralised risk register, the adequacy of and any changes in controls, and to undertake continuous identification of emerging risks. During 2021, the Executive Risk Committee expanded its remit to include monitoring of ESG risks and consideration of risk appetite in relation to the Company’s Principal Risks. The work of the Executive Risk Committee is considered by the Audit Committee at each of its four scheduled meetings, and informs the Audit Committee’s risk management discussions which include annual review of the risk management framework and oversight of internal and third-party assurance relating to the Principal Risks and over key financial controls. Setting risk appetite and consideration of strategic and emerging risks is performed by the Board. In line with good governance, the Board carries out an assessment of the Company’s Principal Risks and Uncertainties and identifies any emerging risks, at least annually.
The Audit Committee, on behalf of the Board, also monitors the Company’s system of risk management and internal control and conducts a review of its effectiveness at least once a year. The review entailed detailed consideration of the current risk assurance framework and planned adjustments for 2022. Detailed discussion also took place on the Company's risk and mitigating actions.
For further information see pages 34 to 38 of the 2021 Annual Report and Accounts.