Holiday Inn 2012 Annual Report Download - page 40

38 IHG Annual Report and Financial Statements 2012
Risk management system
Our internal controls and risk management system aims to support
the delivery of our strategy by managing the risk of failing to achieve
business objectives and protecting our business, in particular:
• our brands and market position;
• our financial strength and performance;
• our business capability and systems including our People,
IT systems and ways of working; and
• our business reputation and relationships with stakeholders.
We are continually evolving our risk management system to
respond to our ever-changing competitive environment, business
relationships and guest preferences and believe that for this to be
effective, we must:
• have a proactive risk management culture;
• embed risk management activity across our business;
• have comprehensive and accurate risk content; and
• have a robust risk management process and framework.
Proactive risk management culture
Having in place an effective system of internal controls and risk
management is essential to being a Responsible Business.
Therefore, the Board aims to embed proactive risk management
capability and culture throughout the business. In achieving this, the
Board is supported by the General Counsel and Company Secretary
and the Heads of Global Risk Management and Global Internal Audit.
IHG’s ambition for risk management is to foster a culture that
is well-informed, curious, alert, responsive, consistent and
accountable so that risk management becomes instinctive.
We consider risks in a wide number of business activities, these
include, but are not limited to,:
• key strategic planning and budget allocation processes;
• the Programme Office’s processes on project planning,
management and delivery (see page 31); and
• the design of policies, procedures, internal controls, and
our approach to corporate governance (see pages 46 to 58).
Our risk management capability is continually developing and
growing through ongoing risk assessment, post-project reviews
and post-incident and crisis reviews.
Embedded Risk Management Activity
We seek to integrate risk-based solutions, programmes and
activities into our day-to-day business processes. The Group
continues to invest in risk management systems, training and
controls to improve the performance and resilience of the
business to protect IHG, our business, our brands, our guests
and our other stakeholders.
By way of example, we have shown the application of the Risk
Management Framework with respect to how we manage safety
and security risk in our hotels in the Hotel Safety Framework on
page 41. Additional risk activity applied to some of the dynamic risks
the Group faces are described in the control and mitigation activities
described on pages 40 and 41.
Comprehensive and accurate risk content
Risk management is about managing uncertainty and IHG seeks
to develop comprehensive and accurate risk content through
risk assessments. This enables us to have better informed
decision-making, which when implemented in the right cultural
context, greatly improve performance at the strategic, tactical and
operational levels of the business. We therefore categorise our risks
in this way to ensure that we consider the relevant risks and have
in place appropriate oversight roles:
• Strategic and market risks: these typically arise from changes
in the external environment and can impact on our Vision,
ambitions and strategy over the long-term (often five to ten years
or more). Risk assessments are integrated into Board level
strategy setting and in the strategic planning process, which
includes reporting to the Chief Executive during strategic reviews.
Strategic risks are managed by senior leadership teams across
the regions and corporate functions, with oversight by the
Executive Committee.
• Tactical and project risks: these are risks that impact the
delivery of IHG’s key initiatives and projects. They often arise
from project delivery challenges such as complexity, inaccurate
assumptions or interdependencies. Project risks are managed
as part of the management and delivery of projects, with central
oversight on all priority projects provided by the Programme
Office and the Executive Committee. As explained on page 31,
the Programme Office has been integral in driving a consistent
approach to our internal projects. Project risk management
awareness, identification and mitigation is included as part
of our project planning, management and delivery processes
and training tools.
• Operational risks: these include a wide spectrum of risks that
can affect the resilience, continuity or performance of IHG’s
internal operating systems or hotels. They are managed by
corporate functions and regional teams working collaboratively
with General Managers and hotel management teams to set
policies and standards, and provide systems and tools,
suitable for hotels to implement. Our senior leadership teams,
regional operating committees, Global Operations Council
and the Executive Committee work together to provide
appropriate oversight.
Risk management
IHG recognises the importance of having in place an effective system of internal controls
and risk management to achieve our Vision of becoming one of the great companies in the
world. Our Board and Committees work together with senior management to identify, assess,
prioritise and mitigate risks. This is an essential part of being a Responsible Business.
Strategic
Tactical
Operational
IHG
Regions
and functions
Projects
IHG operating system
Owned
Managed
Franchised
Hotels
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