As part of the annual risk management cycle, the Executive Board of Directors conducted a company-wide risk assessment during 2020. The assessment aimed to ensure first of all that risk remains within SHV’s parameters and, secondly, that internal control measures worked well - and, if not, what additional measures were required. Action plans were then developed and implemented for those measures in need of improvement.
The assessment confirmed SHV’s risk appetite to be strategically open with a conservative operational and financial approach to business. SHV remains committed to a way of working that makes no compromise on safety, quality, and compliance. With respect to the latter, the Executive Board of Directors reiterated a zero-tolerance approach to areas such as bribery and corruption.
By adopting an outward-looking perspective, the assessment identified the top 15 key risks facing the company. Geopolitical and macro-economic factors were emphasised as key risks in light of the global pandemic and the Russian-Saudi oil price war - the effects of which will continue to be felt in the coming years.
The pace of technological developments was also noted as a potential long-term challenge for Group business models. The world around us is being confronted by an increased level of risk to cybersecurity and by cyber-fraud threats in general, both of which demand high levels of focus within SHV.
Risk is also present in ever-tighter labour markets that put pressure on the company’s ability to attract and retain talented employees. And finally, the speed and breadth of legislative change around the world creates a continuous need to stay abreast of all necessary compliance measures, laws, and regulations.
The company’s regular business processes, together with a robust set of internal controls, continue to manage these risks well. As part of an update to internal control measurements, improvements were made to various processes to ensure this remains the case. For instance, the rolling forecasting process now includes “up” and “down” scenarios to respond more effectively to macro-economic shocks such as a global pandemic. These scenarios contain trigger points with associated actions aimed at enhancing managerial responsiveness.
In terms of safety, requirements have been harmonised across the various Groups to consolidate reporting and best-practice sharing as well as internal benchmarking. On a cultural level, the new purpose Courage to care for generations to come will support company culture through an emphasis on core values.
Globally aligned throughout SHV and its Groups, the risk assessment has generated comprehensive insight into risk appetites, identified key risks, and updated internal control measures. Internal control measures throughout SHV are tested twice a year and the results reported to local management, Group Management, the Executive Board of Directors and Supervisory Board of Directors.
Overall, the Executive Board of Directors considers that these measures, together with existing operating procedures and control frameworks, effectively address the risks facing SHV now and in the foreseeable future.