6. Risk Management
6.1 Risk management framework
As an international business operating in numerous industries, Transfield Services faces a variety of risks that may adversely affect our operations and performance. These include risks associated with:
- economic volatility
- foreign exchange and interest rates
- competition and contract retention
- contract execution
- industrial incidents
- operating in foreign countries
- recruitment and retention of personnel
- industrial relations, and
- government policies and regulations.
Recognition and management of risk is one of the core responsibilities of the Board, supporting the Company’s long-term goal of sustainable growth.
Enterprise Risk Management Framework
The Board, through the RACC, requires that management design and implement risk management and internal control systems to manage Transfield Services’ material business risks, and that management regularly reports to the Board on whether the risks are being managed effectively.
Transfield Services maintains a Risk Policy which aims to make managing risk an integral part of good business practice. The Company utilises an enterprise-wide risk management framework reflecting the global positioning of the Company. This framework encompasses risk, compliance and internal audit elements as well as business resilience, a specialist area covering security, crisis and emergency management, and business continuity.
Transfield Services’ approach to risk management is in accordance with internationally recognised Risk Management Standard ISO 31000:2009, which outlines recommended risk management procedures and processes to implement within an organisation. The Company promotes collaboration between the business by involving employees in the identification and mitigation of risks, increasing the capability of all levels of our organisation to respond to the changing business environment.
The internal audit function plays a key role in risk management by providing an objective appraisal of the effectiveness of, and compliance with, business processes and controls across Transfield Services.
6.2 Reporting on risk management
The Chief Risk and Legal Officer/Company Secretary is the head of the risk management function, and reports to the RACC and the Board on a quarterly basis as to the effectiveness of the Company’s management of its material business risks. Material findings and recommendations are communicated to the RACC, which then ensures that management effectively responds to the recommendations. The Chairman of the RACC reports key risks and their management to the Board.
The Group General Manager, Compliance and Governance, who reports to the Chief Risk and Legal Officer/Company Secretary, heads the internal audit function and separately reports significant findings to the RACC on a quarterly basis. The Group General Manager, Compliance and Governance has independent access, if required, to the MD/CEO and the Board, via the RACC.
The MD/CEO and the Chief Financial Officer provide signed letters to the Board, in respect of each full-year and half-year result that the accounts constitute a true and fair view and are based on an appropriate and effective system of risk management and internal compliance and control.