Risk management

The Board is ultimately responsible for the management of risk in the Group. With guidance from management and advisers, where appropriate, it sets the tone for the Group's policies on risk, appetite for risk and levels of risk tolerance and specifically approves: the Group's insurance programme and risk management policies and plans; significant insurance and/or legal claims and/or settlements; major acquisitions, disposals and capital expenditures; and the Group's Annual Operating and Three Year Plans. The day-to-day management of risk is delegated to the executive directors and the management team, who have specific responsibility for ensuring compliance with and implementing policies at corporate, divisional and business unit level. The Board retains an oversight role and has a schedule of matters specifically reserved to it for decision, with strict delegation of authority limits that have been communicated throughout the businesses and are well understood by the management team and business leaders.

The illustration on the right shows the Elementis risk management framework. It shows that the management of risk is embedded at every level throughout the Group, and involves a continuous and active process of risk evaluation and review of policies, processes and compliance. This holistic approach to risk management is supported by specific roles and activities that are undertaken during the year, and these are summarised as the "principal features of our risk management system'', which can be found below.

Although a key emphasis of any system of risk management concerns the prevention of material financial loss and fraud, safeguarding the value of assets (including reputation) and controls to ensure compliance with laws, regulations and Group policies, the Board's duty to generate and preserve value over the longer term means it has to strike the right balance between being too risk tolerant and being too risk averse. Since risk, as a concept, is prevalent in everything the Company does, risk management is much more than having structures and processes in place, important though they are. An important aspect of risk management is the risk culture within an organisation. For Elementis, this means not just having appropriate policies and processes in place, but involving all our people and knowing that policies and processes have been communicated and are understood at every level within the Group. The message is that risk management is inherent in everything we do at every level and how we view, embrace and manage risk in all its forms is central to how we seek to generate and preserve value over the longer term.

  • Principal features of our risk management system

    The Group’s risk management arrangements and processes are integrated with the management of the businesses and comprise the following elements:

  • Regular review at Board level (as a formal agenda item in at least four meetings each year plus on an ad hoc basis);
  • Monthly reports and review at management team level, including of policies, organisation, resources and business and corporate risks;
  • Schedule of matters reserved for Board decision only together with specific delegation of authorities, including over treasury matters;
  • Group risk management policy and associated guidance and procedures;
  • Insurance and risk transference strategy;
  • Group legal and compliance programme, including Code of Business Conduct and Ethics, anti-bribery and corruption, Group compliance audits and employee training programmes;
  • Business managers and all employees complying with Group policies and standards and for taking responsibility for managing or communicating risk in their work place or areas of operation;
  • Presentations and reports from business units to management team and Board;
  • Risk mapping and assessment exercises, with a comprehensive Group risk register identifying risk mitigation actions;
  • Monthly manufacturing council meetings to review all aspects of HSE policy and performance;
  • HSE corporate compliance programme;
  • Property insurer survey programme;
  • Business continuity planning including testing and simulation exercises;
  • Regular litigation reports from Group General Counsel to the Board;
  • Internal audit programme; and
  • Role of Audit Committee in monitoring financial controls and the reporting of performance.