Risk is defined as the possibility of an event that may adversely affect the achievement of a business’ objectives. The Group has in place a structured and mature approach to risk management which overall ensures a systematic and planned approach to identifying, assessing, prioritising, mitigating and monitoring risks across the business. It is based upon a balance of risk and reward which is established through an assessment of the likelihood and impact, as well as consideration of the Group’s risk appetite. As shown opposite, the Group’s risk management framework incorporates both a top-down approach to identifying our principal risks and a bottom-up approach to identifying our operational risks.
At least once a year, the Board receives risk updates which include: emerging risks facing the Group; an understanding of risk trends; and the actions taken to mitigate risks. The Board also performs a review of the Group’s principal risks annually and in the intervening period risks are reviewed by the Group Risk Committee.
The Board has overall responsibility for the risk management framework and delegates this responsibility to the Group Risk Committee, which is chaired by the Chief Financial Officer and consists of a number of key internal stakeholders. The Group Risk Committee met four times this year and has: reviewed the risks facing the Group; considered mitigating actions and treatments for identified risks; discussed emerging risks; and importantly from late February discussed risks and issues associated with the Ukraine conflict.
The Audit Committee met four times this year to assess the system of internal controls and provide assurance over the Group’s risk management framework through the established in-house Internal Audit team. During the year, the Internal Audit team reported no significant failings or weaknesses in the systems of internal control or the risk management framework.
PRINCIPAL RISKS AND UNCERTAINTIES
The Board has carried out a robust assessment of the principal risks facing the Group, being those risks that could threaten its business model, future performance, solvency or liquidity. The Group is exposed to a variety of risks however, in common with other businesses, it only reports on those risks with a higher likelihood and greater current or near-term impact on strategic objectives, operational plans, or reputational damage.
During the year, as a result of our exposure to animal rights campaigners and other activists which are unique to our industry, the associated risks in this area have now been consolidated within a new principal risk – Adverse Media Attention.
The principal risks and uncertainties facing the Group are summarised here.