Risk management policy and process
Our risk appetite level largely remains cautious rather than aggressive. This has made the Group more resilient and adequately responsive to difficult local and global socio-economic conditions.
Our risk management process
Famous Brands is subject to various risks, including compliance, financial, operational, information technology and strategic risks. The Board and management are accountable for risk management and find an appropriate balance between taking risks and exercising prudence.
Our risk management framework aligns with the Committee of Sponsoring Organizations of the Treadway Commission Framework and has remained solid and mostly unchanged over the past year. Since our strategic choices reduce risks, risk management and the Group’s business strategy go hand in hand. Famous Brands is careful to avoid subjecting the Group to risks that exceed the risk appetite.
Risk management is the responsibility of the Audit and Risk Committee, which provides regular updates to the Board. The Audit and Risk Committee sets out the Group’s risk appetite based on the level of risk it is willing to accept in pursuit of the Group strategy.
At an operational level, the Group’s current and potential risks are tracked by a specialised Risk Forum comprising Exco members and representatives from Internal Audit and other divisions. This forum also allows Famous Brands to realise innovation opportunities by exploring the opportunities related to risks.
In line with good governance practices, every local and foreign legal entity has a duly constituted Board. We have an established process to ensure that these entities prepare their own risk register, which is tabled at entity Board meetings.
Together with the Risk Forum, the Committee and the management team foster a culture of risk governance and awareness throughout the Group. The Group receives expert advice from our Group Risk Executive on properly incorporating risk management procedures into daily operations. The Group Risk Executive and other risk specialists are involved in the development and execution of business strategy, including implementing key action plans. They are present in project teams as a sounding board on potential issues.
The Group’s top ten key risks are defined below, along with their potential impact, our mitigating actions, and the potential upside they offer. We have identified both internal and external risks. We indicated impact categories based on the tolerance levels across the four areas: finance, reputation, consumer and employee. The likelihood is based on the probability of occurrence.