2013 Registration document and annual financial report - page 130

Registration Document 2013
128
Corporate Governance
3
Report of the Chairman of the Board of Directors
3.2.2.3. Identifying and analyzing risks
The Group identifies and analyzes the key risks that, if they
occurred, would affect its ability to fulfill its objectives. It takes
the appropriate measures to limit the probability of these risks
occurring and the consequences if they do.
As part of these measures, the Group has a Risk Coordination
Committee, which reports to the Corporate Secretary and
meets on a monthly basis. The Committee’s members comprise
representatives from the following departments:
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the Risk Management Department;
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the Group Safety and Security Department;
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the Legal Affairs Department;
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the Group Insurance and Hotel Risk Prevention Department;
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the Internal Audit Department.
Identifying risks
The Group is exposed to a number of risks in the normal course
of business.
These risks, together with the related control procedures, are
described in the “Risk Factors” section of this RegistrationDocument.
They mainly correspond to operational risks, environmental risks,
legal risks (including litigation and arbitration risks), and financial
risks. The “Risk Factors” section also includes a description of
the Group’s insurance strategy.
Risk mapping
Internal control risk maps are prepared based on the Internal Audit
assignments and above-mentioned self-assessments. Thesemaps,
which highlight issues that require priority action, are included in
the relevant Internal Audit reports and are periodically presented
in summary form to the Internal Control Committee and the Audit
and Risks Committee.
A global risk map covering all internal and external risk factors
has also been developed in order to obtain data in a standard
form concerning the Group’s levels of risk exposure as perceived
by Executive Management and by each unit, and to prepare the
appropriate action plans when required. Each risk is assessed based
on the level of potential damage it could cause, the probability of
it occurring and how efficiently it is managed.
The Risk Management Department subsequently helps the
operating divisions to put in place corrective measures in order
to mitigate the main identified risks.
In 2013, the Group continued to implement its coordinated risk
management approach, with Executive Management and all of
the Group’s units updating their risk maps. As is the case every
year, the results of these updates were presented to the Audit
and Risks Committee in December.
3.2.2.4. Control activities
To improve control of identified risks, the Group has set up control
procedures that comply with its standards and cover both operating
and financial information processes.
Authorization process for expansion capital
expenditure and disposals
A procedure has been set up for the prior authorization of capital
expenditure projects, to ensure that they comply with Group strategy
and return-on-investment-criteria. The procedure requires formal
authorizations to be obtained from the appropriate line and staff
managers, in a standard format. A similar authorization procedure
has been established for disposals.
As part of this process, the Group has an Investments Committee
which is tasked with reviewing projects representing amounts
of between €5 million and €100 million (or €2.5 million for the
acquisition of minority shareholdings). Based on its findings, the
Committee decides whether or not to approve the project.
The Committee’s members are the Chairman and Chief Executive
Officer, the Deputy Chief Executive Officer, the Chief Financial
Officer and the Chief Executive Officer of HotelInvest. The Senior
Executive Vice-President responsible for Hotel Development is
also a member of the Investments Committee and leads any
discussions on hotel development projects.
The Investments Committee meets around once a month.
Preparing and controlling the consolidated
financial statements
The consolidated financial statements are prepared by Group Finance
based on information reported by the subsidiaries’ Chief Executive
Officers and Finance Directors. The format of the consolidation
packages is determined by the Group.
The subsidiaries are responsible for the information contained
in their consolidation packages and are required to make formal
representations to Group Finance about the fairness of reporting data
and its conformity with Group accounting standards and policies.
The Consolidation Department carries out systematic controls
of the consolidation packages submitted by the subsidiaries.
A detailed schedule for reviewing the packages has been prepared
and sent to the employees concerned.
In connectionwith their audit of the consolidated financial statements,
the Statutory Auditors audit the consolidation packages transmitted
by the subsidiaries included in the scope of their audit. Corporate
Internal Audit also reviews from time to time the proper application
of Group accounting standards and policies by the subsidiaries, and
reports to Group Finance any issues identified during the review.
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