Holiday Inn 2015 Annual Report Download - page 29

Risk description Trend Impact How do we manage these risks?
Safety and security
Safety and security risks are inherent
to all hotel operations, complicated by
continuing geopolitical instability threats
in markets where IHG operates. Failure to
operate an appropriate risk management
system which safeguards our guests and
employees could impact IHG’s reputation.
• Safety and security is of paramount importance to IHG and an extensive safety
and security risk management system is in place.
• The safety and security risk management system includes risk and threat
assessment, policies and standards, training programmes, performance and risk
monitoring, and reporting and analysis.
• Our operational safety and security teams comprise team members with extensive
subject matter expertise and experience, who provide support to line management
to equip them to plan for, and respond to, incidents when they occur.
Cybersecurity and information
governance
Threats to the security of guest and other
sensitive information held and used by
IHG are increasing and failure to manage
these could impact our operations, result
in fines and undermine stakeholder trust
in our business.
• We take cybersecurity and information governance very seriously and have applied
risk-based methods to build capability and resilience into our systems and processes.
We manage information security to contain the risk and reduce the Group’s exposure,
tightly controlling sensitive information through limited and monitored access.
• We continue to aim to be fully compliant with Payment Card Industry – Data Security
Standards (PCI – DSS), using tools and services with respect to payment-card
processing from leading specialist third-party providers.
Programme and project delivery
IHG is currently delivering a number
of large and complex business change
programmes and failure to manage these
effectively could impact the value realised
from our investments.
• Our programme management capability is overseen by our Strategic Portfolio
Management team who ensure strategic alignment and prioritisation of key
programmes, develop organisational capability through training and implementation
of the Group’s project delivery approaches and tools, and independently monitor
the progress of key organisational change programmes.
• This team is supported by regional and functional project management teams,
who manage and monitor specific programmes and projects.
Legal, regulatory and ethical compliance
While the hotel sector is not subject to
stringent industry-specific regulations,
the global business environment is
evolving, with regulators enhancing
their enforcement activity.
• Our regulatory compliance programme works to identify and respond to relevant
regulatory requirements. These include, but are not limited to, anti-bribery and
corruption, data privacy and antitrust. These programmes consist of policies,
communications and training, and are supported by confidential disclosure channels
and ongoing monitoring procedures.
• Additionally, we continue to monitor key legal and ethical developments relevant
to our business model, intellectual property and operations.
Financial management and control
Increased public scrutiny, litigation and
regulatory investigation have once
again highlighted the need for companies
to ensure that their financial reporting,
controls and management systems
are robust.
• The maintenance of a sound financial reporting and control environment is achieved
through an effective policy framework, training programmes, and layered
performance and review processes.
• IHG has a mature, experienced and stable global finance function, encompassing
specialist groups including, but not limited to, the following teams: Group Tax, Group
Treasury, Procurement and Cost Efficiency; Global BSC Operations; Global and
Regional Financial Planning and Analysis; Global Financial Reporting; and Governance
and Compliance (including compliance with the Sarbanes-Oxley Act 2002).
In 2015, we have assessed in further detail the principal risks relating to IHG’s reputation and how we will enable future performance.
Viability statement
In assessing the viability of the Group,
the Directors have reviewed a number of
scenarios, weighting downside risks that
would threaten the business model, future
performance, solvency and liquidity of the
Group more heavily than opportunities. The
scenarios included a severe but plausible
downturn similar to the financial crisis that
occurred from 2008 to 2009 and a reverse
stress test of the business starting from the
presumption of the Group having insufficient
liquidity to continue trading. In the severe
scenarios, the Directors also considered
actions that would be taken if such events
became a reality.
The Directors have determined that the
three-year period to 31 December 2018 is
an appropriate period to be covered by the
viability statement as each year the Group’s
planning process builds into a robust
three-year plan. The detailed three-year plan
takes into consideration the principal risks
outlined on pages 26 to 27, the Group’s
strategy, and current market conditions.
The plan then forms the basis for strategic
actions taken across the business. The plan
is reviewed annually by the Directors and
approved towards the end of the calendar year.
Once approved, the plan is then cascaded to
the business and used to set performance
metrics and objectives. Performance against
those metrics and objectives is then regularly
reviewed by the Directors.
The Directors have assessed the viability
of the Group over a three-year period to
31 December 2018, taking account of the
Group’s current position, the Group’s strategy
and the principal risks documented in the
Strategic Report. Based on this assessment,
the Directors have a reasonable expectation
that the Group will be able to continue in
operation and meet its liabilities as they fall
due over the period to 31 December 2018.
27
IHG Annual Report and Form 20-F 2015
STRATEGIC REPORT GOVERNANCE GROUP FINANCIAL STATEMENTS ADDITIONAL INFORMATIONPARENT COMPANY FINANCIAL STATEMENTS