Lenovo 2013 Annual Report Download - page 58

CORPORATE GOVERNANCE REPORT
Lenovo Group Limited 2012/13 Annual Report
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Inside Information
Regarding procedures and internal controls for the handling and dissemination of inside information, the Company is aware
of its obligations under the Securities and Futures Ordinance and the Listing Rules as well as the overriding principle that
inside information should be announced immediately if it is the subject of a decision. The Company conducts its affairs with
close regard to the applicable laws and regulations prevailing in Hong Kong and has implemented policies and procedures
which strictly prohibit unauthorized use of confidential and inside information, and has communicated to all relevant staff
regarding this matter.
Control Effectiveness
The Board, through the Audit Committee of the Company, conducts a continuous review of the effectiveness of the internal
control system operating in the Company and considers it to be adequate and effective. The review covers all material
controls, including financial, operational and compliance controls, and risk management functions. The Board is not aware
of any significant areas of concern which may affect the shareholders. The Board is satisfied that the Company has fully
complied with the code provisions on internal controls as set forth in the Corporate Governance Code.
Enterprise Risk Management
At Lenovo, risk is defined as a potential action, event or circumstance that could impact the Group’s ability, favorably or
unfavorably, to meet its strategic goals. Risk is an inherent part of the Group and needs to be understood and managed
properly to provide a foundation for the Group’s sustained growth. In line with the commitment to deliver sustainable value,
Lenovo has implemented an Enterprise Risk Management (ERM) framework to proactively manage risks.
Lenovo’s ERM framework is effected by Lenovo’s Board of Directors and management team, and is applied in strategy
setting and across all major functions of the Group. It involves:
• The ERM team, who is responsible to design, implement, review, and update Lenovo ERM framework.
• All Lenovo major functions, where risk ownership is established via the appointment of Risk Champions in each
function.
Within this framework, critical and major risks of the business functions, especially in view of the changing business
environment, are identified and assessed at the business planning stage. For each of these risks, decisions are made
on the appropriate risk strategy to adopt to manage the risk (i.e. avoidance, retention, reduction, or transference) and
resources are allocated accordingly. These risks, as well as the effectiveness of the relevant risk strategies, are monitored
and reviewed by each business function. Where necessary, Internal Audit or the Business Control teams are engaged
to reinforce the effectiveness of the risk strategies. At the group level, the risks are also reviewed by the ERM team, and
cross-functional cooperation engaged where relevant. At least annually, top risks and corresponding risk strategies are
highlighted to the Audit Committee.
The ERM framework covers all types of risks faced by the Group, both external and internal, and has helped enhance the
Group’s efforts to provide strong support for its rapid growing business, across all markets. This framework will continue to
be strengthened, so as to create a robust risk management culture which safeguards the value of the Group.