Risk management policy and process
Famous Brands’ philosophy is that risk taking, in an appropriate manner, is an integral part of our business. Our success relies on optimising the trade-off between risk and reward. In the course of conducting business, the Group is exposed to a variety of risks, including but not limited to strategic, financial, operational, compliance and reputational risk. The long-term sustainable growth, continued success and reputation of the business are critically dependent on the effectiveness of risk management. Risk management continues to be one of our core focus areas and notable progress has been achieved since commencing implementation of our three-year risk management plan. The Group’s risk management framework aligns to the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Framework, illustrated below. Our risk philosophy is underpinned by our strategy to create value for shareholders through sustainable growth, in a manner that is consistent with shareholder expectations of the business’s risk-bearing capacity and its risk appetite.
Our risk management process and frameworks enabled the business to remain flexible and resilient in the difficult trading conditions and assisted us in achieving our strategic objectives. They also provided a forum to identify and realise opportunities to deliver sustainable value for stakeholders.
Source: Enterprise Risk Management Framework: integrating with strategy and performance © 2017 COSO. All rights reserved. Used with permission.
The Audit and Risk Committee oversees risk management on behalf of the Board, and the Committee and the management team, together with the established Risk Forum, promote a culture of risk governance and awareness throughout the organisation.
Risk activity and accountability
As illustrated below, risk is proactively managed across the Group.
Identification of risk
Key risks are identified based on:
- Risk-bearing capacity (the capacity to absorb losses arising from risks without an immediate threat to the Group’s continued existence based on its current business model);
- risk appetite (the amount and type of risk the Group is willing to accept in pursuit of its strategic objectives); and
- risk tolerance (the acceptable levels of variation relative to the achievement of the Group’s strategic objectives).
Our key risks are outlined below, together with their potential impact, our mitigating actions, the opportunities presented, future focus and outlook. Both internal and external risks have been identified and are addressed through focusing on our business’s key material matters.
The table below refers to the top 10 key risks identified and managed in FY2019 and FY2020. They are ranked according to their materiality to the Group’s sustainability based on the inherent exposure.