Bidvest
The Bidvest Group Limited
Annual report 2008
 
 
Corporate governance  
 
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Risk management

The board is responsible for the total process of risk management. It sets the risk strategy, which is based on the need to identify, assess, manage and monitor all known forms of risk across the Group. Risk management is conducted after consulting with the executive directors and senior management within the divisions.

Management is accountable to the board for designing, implementing and monitoring the processes of risk management and integrating it into the day-to-day activities of the Group. The risk aversion philosophy is communicated to all managers and employees in an endeavour to incorporate this philosophy into the language and culture of the Group. Risk management and internal control are practised throughout the Group and are embedded in day-to-day activities.

The risk committee attests that there are adequate systems of internal control in place to mitigate the significant risks faced by the Group to an acceptable level. The systems are designed to manage, rather than eliminate, the risk of failure or to maximise opportunities to achieve business objectives. Risk is not only viewed from a negative perspective. The review process also identifies areas of opportunity, such as where effective risk management can be turned to a competitive advantage.

The management of risk and loss control is decentralised, but in compliance with Group policies on risk financing and self-insurance, utilises the Group risk-management framework. Compliance measurement is conducted through the review of periodic risk-activity reports including measurement of identified losses. The decentralised structure and geographic spread ensures that the overall Group risk is balanced and minimised.

At operational level, senior management identifies major business risks, promotes awareness, introduces applicable control environments and procedures and applies risk-monitoring techniques. The divisional risk committees identify the manner and extent to which risk is controlled and/or reduced, while monitoring the process.

Bidvest’s decentralised structure each of the operations being self-sufficient with regard to disaster recovery and management succession plans. The individual business units are sufficiently small and independent of each other to eliminate Group-wide disaster risk.

In addition to the Group’s other the need for a confidential reporting process (“whistle blowing”) covering fraud and other risks. The whistle-blowing reporting procedures and 24-hour call centre ensure formal reporting and feedback. The call centre received 484 calls, resulting in 153 investigations. These investigations covered human resources issues (73), breach of ethics or unfair labour practice (23), reported racism (6), general complaints (12), requests for information (18) and criminal investigations (21). These investigations have lead to numerous disciplinary actions and some criminal prosecutions.

The calls relating to the investigations were received and answered in seSotho (1), isiXhosa (1), seTswana (2), isiZulu (15), Afrikaans (15) and English (119).

While operating risk can never be fully eliminated, the Group endeavours to minimise it by ensuring that the appropriate infrastructure, controls, systems and human resources are in place throughout the businesses. Key policies employed in managing operating risk involve the segregation of duties, transaction authorisation, monitoring and financial and managerial reporting.

The effectiveness of the internal control systems, including the potential impact of changes in the operating and business environments, is monitored through regular management reviews (with representation letters on compliance signed annually by the chief executive and chief financial officer of each major business unit), testing by internal auditors and testing of certain aspects of internal financial control systems by the external auditors during the course of their statutory examinations. Directors make annual written declarations of interests and are obliged to report any potential or actual conflicts.

Sustainability

The principles of sustainability within Bidvest are set out in Sustainability at Bidvest. This year the sustainability report is presented as part of the annual report. The Global Reporting Initiative guides Bidvest’s approach to faceted decentralised group, divisions may have different sustainability issues and reporting meaningfully in totality presents a challenge, although several key issues are common. An online internet-based data collection tool has been developed to facilitate the collation, management and reporting of sustainability issues.

Sustainability at Bidvest is about being Proudly Bidvest and offers employees a fresh way of thinking that inspires them, and enables a new generation of entrepreneurs to create business value that integrates evolving financial, social and environmental needs and expectations.

The risk committee and the board adopted Group environmental and HIV/Aids policies, which have been in place and operative since 2006. Some divisions have developed a specific environmental policy relevant to their business.

RELATIONSHIPS WITH SHAREHOLDERS

The Group pursues dialogue with institutional investors based on constructive engagement and the mutual understanding of objectives, having regard to statutory, regulatory and other directives regulating the dissemination of information by companies and their directors. To achieve this dialogue there have been a number of presentations to, and meetings with, investors and analysts to communicate the strategy and performance of the Group. The quality of this information is based on the standards of promptness, relevance and transparency. The Group makes every effort to ensure that information is distributed via a broad range of communication channels, including the internet, having regard for security and integrity while bearing in mind the need that critical financial information reaches all shareholders simultaneously.

The board accepts its duty to present a balanced and understandable assessment of the Group’s position in reporting to the communities in which it operates and the greater demands for transparency and accountability regarding non-financial matters. Reports address material matters of significant interest and concern to all stakeholders and present a comprehensive and objective assessment of the Group so that all stakeholders with a legitimate interest in the can obtain a full, fair and honest account of its performance.

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