BT 2013 Annual Report Download - page 25

Strategy 23
Strategy
Our risks
Like all businesses, we are affected by a number
of risks and uncertainties. These may be impacted
by internal and external factors, some of which we
cannot control. Many of our risks are akin to those
felt by similar companies in terms of scale and
operation.
Principal risks and uncertainties
This section sets out the principal risks and uncertainties affecting us,
but it is not exhaustive. These risks have the potential to impact our
business, revenue, profits, assets, liquidity or capital resources.
As in the prior year, the uncertainties in the global economy and credit
markets continue to present challenges, both to our business and to
others. These challenges drive a number of the risks that we face and we
focus our efforts on predicting and mitigating them. The principal risks
we described last year have evolved, and so has our response to them.
Our Enterprise Risk Management framework provides reasonable
(butcannot give absolute) assurance that significant risks are identified
and addressed. There may be risks which are unknown or which are
presently judged not to be significant but later prove to be significant.
In our principal risks section below, we explain what we are doing to
prevent our main risks materialising, or to limit their impact.
Our principal risks and uncertainties should be considered in conjunction
with the risk management process, the forward-looking statements for
this document, and the cautionary statement regarding forward-looking
statements.
You can read the cautionary statement regarding
forward-looking statements on page 177
How we manage risk
We need to manage risk so we can meet our objectives, build
shareholder value and promote our stakeholders’ interests.
We have a group-wide risk management process. It has four
stageswhich are summarised below.
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Changes over the last year
Last year we improved the way we manage risk through better
reporting, evaluation and training. This year we have further developed
our approach including:
— Scenario planning and ‘war gaming’. We have already used these
techniques to good effect in understanding traditional physical
business continuity threats. This year we have also applied them to
some of the risks we highlight below.
— Assurance. Our line of business and service unit audit & risk
committees have extended their focus on risk management across
their business units. Their advice, analysis and reviews have helped
usget better at dealing with risks inside our business.
— Guidance and toolkit refresh. We have updated our risk
management policy and guidance. We have also added to the toolkit
that our risk management specialists (and the wider business) use to
put our risk management process into action.
Enterprise Risk Management framework
Board
Audit & Risk
Committee
Our lines of business and our
service unit follow our process
for managing risk as part of our
Enterprise Risk Management
framework. That means identifying
and responding to the key risks to
their business. They record the risks
in a register for their leadership
teams to review. Audit & risk
committees in each line of business,
and our service unit, ensure this
process is effective.
The Group Risk Panel supports
the Board and the
Operating
Committee
. Every three months it
reviews the Group Risk Register
(which summarises those risks of
greatest significance across our
business), considers the inclusion
of new or emerging risks, and
recommends ways to tackle them. It
also oversees the work of the group
risk management function.
The
Operating Committee identifies,
evaluates, responds to and monitors
risks. Significant risks are reported
and monitored through the Group
Risk Register. The Operating
Committee
assigns a management
owner to take charge of monitoring
and managing each risk. It monitors
these risks through regular detailed
reviews as well as six-monthly
reviews of the Group Risk Register.
The Board has overall responsibility
for making sure we manage risks
appropriately. It regularly reviews
either directly, or through the
Audit
& Risk Committee
, how we are
doing across the group, in our lines
of business and in our service unit.
Operating
Committee
Group Risk Panel
Line of business & service
unit leadership teams
Line of business and
service unit audit
& risk committees