The audit and risk committee is an integral component of the risk management process and specifically the committee shall ensure by enquiry of management, external and internal auditors that all material corporate risks have been identified, assessed, monitored and effectively managed. As HCI is an investment holding company the risk management process takes into account the risks and opportunities within the company as well as those inherent in its portfolio of investments.
All controlled entities are required to adhere to the relevant principles of King III. The committees’ responsibilities are to ensure that:
• it is management’s responsibility to design, implement and monitor the risk management policies;
• risk assessments are performed on a continual basis;
• frameworks and methodologies are implemented to increase probability of anticipating unpredictable risks;
• risk responses by management are considered and implemented;
• risks are monitored continuously; and
• the Board should receive assurance regarding effectiveness of risk management.
The committee is accountable to the board for implementing and monitoring the processes of risk management and integrating this into day-to-day activities. The committee however does not assume the functions of management, which remain the responsibility of the executive directors, officers and other members of senior management.
A disciplined and timeous reporting structure enables the committee to be fully apprised of group company activities, risks and opportunities. This is achieved by requiring that controlled companies report their key risks and responses to the committee on a bi-annual basis, with additional exception reporting as required. The focus of the committee is on those risks which may negatively impact the long-term sustainability of the particular business or have a material impact on earnings. The chairperson of the committee reports to the board of HCI on the most significant risks derived from the above process. This continual emphasis on risk management assists the board to foster a culture in the HCI Group that emphasises and demonstrates the benefits of a risk based approach to internal controls and management of the group. Effective risk management is seen as fundamental to the sustainability of the group’s interests. It further enables the principle that risk management is also about analysing opportunities and not only guarding against downside possibilities.
The committee will conduct annual reviews of its performance and ensure it is provided with resources to perform its duties and ensure sufficient training to its members.