Enterprise Risk Management Report

Transcription

1 Effective risk management is fundamental to the achievement of the Group s strategic objectives. The ERM System has been in place since 2010 which provides clear responsibility and accountability structures for risk management, and consists of three major components comprising risk governance, risk infrastructure and oversight and assignment of risk ownership. Risk Governance Risk Infrastructure and Oversight The Board is responsible for determining the Group s risk profile within risk appetite, overseeing the Group s risk management framework, reviewing the Group s key risks and mitigation strategies and ensuring the risk management effectiveness. The RMC reviews the management of these risks and effectiveness of mitigation strategies and controls. Risk Ownership Committee The Group formed the RMC in 2009, comprising all Executive Directors as part of the Group s commitment to further enhancing its control environment. The RMC, made up of three executive directors, has written terms of reference that set out the responsibilities of its members. It held six meetings for the year ended 31 March The RMC assists the Board in overseeing and monitoring the implementation and effectiveness of the ERM framework and processes, determines risk profile, reviews risk responses, and formulates a risk management strategy for the Group. The Terms of Reference for the RMC were revised, updated and approved by the Board in These Terms of Reference are available on the Company s website. 140

2 Enterprise Risk Assessment Risk assessment is the identification and analysis of existing and emerging risks to achieve the Group s objectives, forming a basis for determining how risk is managed in terms of likelihood and impact. A topdown and bottom-up approach is utilized to ensure a holistic risk management process. The top-down approach assesses and manages strategic risks to achieve the Group s objectives from top management, while the bottom-up approach is supported by cross-functional workshops with line management to identify and prioritize risks. High risk areas are categorized into Strategic, Operational, Financial and Compliance functions for more focused assessment and management. In addition, the IAMS Department facilitated major business units of the Group to implement the Risk Control Self-Assessment ( RCSA ) program, through the use of detailed questionnaires, requiring respective general managers and department heads to identify key risks within their areas of accountability and assess the adequacy and effectiveness of risk management and internal control system. The RCSA program results not only complements the Group s existing ERM system but also provides a more integrated Group-wide perspective on the effectiveness of the Group s risk and control framework. A Group risk register was compiled at the inception of the ERM System and has been regularly monitored and updated for continuous risk assessment purpose. Enterprise Process The ERM System uses risk indicators and red flags to monitor the top 10 selected priority risks. The setting of risk indicator aligns with the risk tolerance, representing the risk magnitude the Group is willing to take in achieving its business goals. Additionally, a balance scorecard system has been implemented, incorporating key performance indicators to measure progress in achieving business goals. The balance scorecard system and the ERM System are harmonized, allowing the Group to monitor a comprehensive set of risks at the same time for better business performance. The RMC meetings are held at least on a quarterly basis to review and discuss risk management progress of each of the top 10 priority risks and to provide continuous pulse of the business environment and monitor changes. If there are any risk indicators highlighted by red flags, responsible risk owners are required to propose, agree on remedial action plans and promptly follow up to ensure risks are properly managed. The IAMS Department carries out continuous assessment on the quality of risk management process and risk responses. A consolidated summary report is presented to the Audit Committee quarterly to enhance the accountability and quality of the risk management process. 141

3 Top-Down Approach Assessment and Management of Strategic to Achieve Group s Objectives Risk Governance and Infrastructure Responsibilities Overall Responsibility Determine Risk Profile and Oversee Framework Review Key and Mitigation Strategies and Ensure Effectiveness Function The Board Provide Risk Assurance to the Board Oversee Structures and Processes Determine Risk Profile and Review Risk Responses Formulate Risk Management Strategy Guidelines, Roles and Responsibilities Enterprise Risk Monitoring & Reporting Risk Mitigation Plan & Risk Indicators Top 10 Risk Escalation and Assurance Risk Response Validation Audit Committee Committee Identify, Assess and Evaluate in Achieving Strategic Objectives Set Risk Priorities for Business Unit Prepare and Update the Business Unit Risk Register Enterprise Risk Assessment and Risk Treatment Strategic Operational Financial Compliance Risk Assessment Facilitation Business Units Individual The ERM Framework Bottom-Up Approach Cross-functional Workshops Identify and Prioritize 142

4 Enterprise Report Management of Key As the Group operates in a highly competitive and retail-based landscape, continuous and effective risk management is vital source towards achieving high performance and accomplishing business targets. Some key risks currently being managed are: Talent Acquisition and Staff Retention In view of the current competitive business environment, the Group is exposed to unhealthy and unacceptable staff turnover and vacancy rates which would ultimately affect productivity and business results. The Group has increased the number of recruitment spots and regularly benchmarked existing compensation benefits against market in acquiring talents to mitigate staff vacancy. The Group mitigates staff turnover rate by conducting new recruits sharing session to strengthen bonding relationship and staff satisfaction survey as a means to understand and address career aspiration and personal development needs. As a result, the frontline staff career roadmap has been redefined to provide more flexibility for career development. In addition, a mentoring scheme is in place to provide guidance to frontline staff during career progression. There is also a management training programme for new graduates under which each management trainee is given the opportunity to develop a clear and personal career path. The Group has also launched functional training and development programs to upgrade staff competence. 143

5 Mainland China Business Growth While the Group is taking progressive and disciplined steps in growing its market presence in the Mainland China, it is exposed to infrastructural risks, including weak local management team structure, inexperienced staffs and inadequate systems which may compromise scalability and business growth. The Group has implemented talent management and development program in acquiring competent management staff to strengthen local management foundation. Tailored selling and customer service training sessions are offered to frontline staff to enhance their capability and to improve personal and store performances. In addition, the Group is placing greater focus on process and system development, automating work processes and systems using Information Technology, continually upgrade inventory management and review product offering mix to cater for changing market conditions. Mainland China Network /11 11/12 12/13 Multi-brand Sa Sa Stores 144