Lenovo 2016 Annual Report Download - page 86

84 Lenovo Group Limited 2015/16 Annual Report
CORPORATE GOVERNANCE REPORT
Plans to mitigate the identified risks are, at the same time, developed for implementation, to continuously
deliver sustainable value.
With this practical and effective framework, risk management features are integrated into each function.
Critical and major risks of the business functions, especially in view of the changing business environment,
are identified and assessed based on a risk assessment matrix that helps to rank the risks and prioritize
risk management effort to determine the appropriate risk mitigation plans.
Risk Rating Matrix
4Extreme H H VH VH
3High M M H H
2Moderate L L M M
1Low L L L L
Remote Unlikely Possible Almost Certain
1 2 3 4
IMPACT
LIKELIHOOD
Risk Rating
VH Very High
H High
M Moderate
LLow
The risks are monitored and reviewed by each business function as well as at the group level. And at least
annually, the ERM team coordinates the risk identification and assessment process and the identified risks
are highlighted to the Audit Committee, along with the status of actions taken to manage these risks.
Risk
Champions ERM Team Audit Committee
Board of
Directors
Identify risks
Assess
Manage
Monitor
Review
Risk registration
Report risks to Audit Committee
Risk projects
Engage actuarial work
Recommend risk tolerance
Insurance management
Review risks
Raise concerns
Approve risk tolerance
During the year, there was continued strong focus at the business level to address the fast changing
industry trends. At the operational level, risk management was also strengthened to improve the
robustness of our supply chain. More details of some of these risks may be found under “Material Risks
of the Group” on page 22 to 26 of this annual report. This framework will continue to be strengthened to
create a robust and holistic risk management culture to safeguard the value of the Company.
At the enterprise level, Lenovo’s risk tolerance is also reviewed periodically, and changes are approved by
the Audit Committee. The ERM team engages actuarial studies to quantify risks, and the Company’s risk
tolerance is adjusted when appropriate. The risk tolerance represents the amount of risk the Company is
willing to undertake in the pursuit of its strategic and business objectives. Where necessary, ERM employs
risk transfer strategies through insurance management. ERM also initiates risk projects to improve risk
awareness.