Holiday Inn 2015 Annual Report Download - page 27

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Our robust and effective risk management system continues
to evolve, enabling our business to achieve its strategic
objectives, and deliver sustainable, long-term growth
and a commitment to responsible business practices.
Our Winning Model and risk
The combination of our strategy (see pages 14 and 15) and business model (see pages 12 and 13) creates both opportunities and inherent risks
and uncertainties. The Board is ultimately accountable for the effectiveness of the risk management and internal control systems, and is supported
by the Audit Committee, the Executive Committee and other delegated committees, which oversee our risk management system and ensure that
risks are appropriately identified and managed within IHG’s risk appetite.
Risk appetite
IHG’s risk appetite is reflective of the nature and extent of risk that the Board and IHG are willing to take and manage in pursuit of our strategic
and other objectives. This is then cascaded through the goals we set, the strategy we choose, the decisions we make and how we allocate resources.
Specific limits and guidelines for risk-taking are reflected in our governance committees and structures, our policies (eg our delegation of authority
policy), and the targets we select.
Our risk management system
Our system for managing risk is fully integrated with the way we run the business through our culture, our management controls and our reporting.
Our Global Risk Management function is responsible for the support, enhancement and monitoring of the effectiveness of this system, which
encompasses the key areas below.
Risk and culture
Tone, attitudes, ethical values and policies
IHG’s culture is supportive of considered and conscious risk-taking
in pursuit of business objectives, and is embedded through, for
example, our Winning Ways (see page 17) and our Code of Conduct,
which consolidates and clarifies our ethical values and expected
standards of behaviour.
The Code of Conduct, available at www.ihgplc.com/investors under
corporate governance, is applicable to all Directors, officers and
employees. It is supported by an e-learning programme and key
policies in areas such as bribery, gifts and entertainment, and
handling personal data. We also have a confidential disclosure
channel to provide employees with a means to report any ethical
concerns they may have.
Governance and committee structures
IHG has an operational committee structure in place, which includes
regional operating and expenditure committees, franchise and
management deal approval committees, and compliance
committees, to ensure effective oversight and review of the Group’s
activities. These committees oversee, manage and mitigate risk in
relation to their activities.
We continue to review and adjust management committees in light
of changing business needs and to ensure they support effective and
efficient decision-making, including appropriate consideration of risk.
In 2015, we have confirmed and reinforced committee
accountabilities in relation to our brand and marketing activities,
our programme portfolio management, and our owner strategy.
Risk and control management
Three lines of defence
As well as continued reinforcement of ‘first line’ accountability
for risk management, we have continued to enhance our capability
in ‘second line’ subject matter expertise. In 2015, this has included
enhancements to procurement and HR processes, and continuing
focus on regulatory compliance. ‘Third line’ independent assurance
is primarily provided by Global Internal Audit, whose audit plan is
aligned with the Group’s principal risks.
Risk and strategy
In developing our strategy, we seek to mitigate or exploit a number
of strategic risks to our business. Our strategic planning process
involves the Executive Committee and relevant regions and functions,
who develop plans that consider and address strategic risks,
business-as-usual operational risks and financial control and
compliance considerations within the framework of our broader
risk appetite.
Risk monitoring and reporting
Risk and performance monitoring
Risk and performance information is crucial to effective
management of known risks. Through regular review of key risk
indicators and progress against our KPIs (see pages 28 to 31),
and our internal performance measures monitored in connection
with delivering our ‘winning culture’ (see page 18), we are able
to monitor risk trends and emerging risks effectively.
Principal risk reporting
IHG’s principal risk review process engages management to
identify, assess, manage and monitor the principal risks and
uncertainties affecting the Group, considering risks related to our
strategy, operations and to our financial reporting and compliance
responsibilities, reporting to the Board and Audit Committee on
a biannual basis. Our principal risk review is described overleaf.
25IHG Annual Report and Form 20-F 2015
STRATEGIC REPORT GOVERNANCE GROUP FINANCIAL STATEMENTS ADDITIONAL INFORMATIONPARENT COMPANY FINANCIAL STATEMENTS