Risk migration in 2016 and robust assessment
In 2016, the management carried out a robust assessment of the principal risks facing the Group. The Audit Committee has carefully reviewed the assessment on behalf of the Board.
The assessment focused on the risks that could adversely affect the Group’s strategies, evaluation of risks identified at the plant level to consider their relevance and significance for the Group, and detailed assessment of some specific areas where new risks have been identified or the risk profile has changed significantly. As a result, the principal risks have been confirmed.
Whilst the composition of the Group’s principal risks has not changed compared with the previous year, a detailed analysis of their impact and probability of negative consequences for the Group has led to a recalibration in assessment of some of the risks.
The Group has also considered and assessed some risks not emphasised previously, eg IT security and IT infrastructure failure, HR succession planning, taxation, and other risks. Whilst the impact and probability analysis suggests that such risks could affect the Group’s operations to some extent, the management does not consider those risks as being capable of seriously affecting the Group’s performance, future prospects or reputation.
Additionally, the Group has considered how the UK referendum in favour of leaving the EU might impact its operations. The Group believes that the UK referendum results will not significantly affect its business.
Key developments in 2016
To enhance the transparency of risk reporting, the Group’s Risk Committee was transformed into the Risk Management Group.
Like the Risk Committee, the new Risk Management Group is composed of the vice presidents under the leadership of the CEO. The Risk Management Group’s role is to support the CEO in the day-to-day supervision and management of risk, as well as to provide assurance and advice to the Audit Committee members, on the effectiveness of the Company’s risk management and internal control systems.
Principal risks and uncertainties heat map in 2016
Please see description of the mitigating actions on the next page.