Alaska Airlines and Horizon Air 2012 Annual Report Download - page 47

CORPORATE GOVERNANCE
RISK OVERSIGHT
Alaska Air Group has adopted an enterprise-
wide risk analysis and oversight program.
This program is designed to: a) identify the
various risks faced by the organization; b)
assign responsibility for managing those
risks to individual executives within the
management ranks; and c) align these
management assignments with appropriate
board-level oversight.
Responsibility for the oversight of the
program itself has been delegated to the
Board’s Audit Committee. In turn, the Audit
Committee has tasked the Company’s chief
risk, compliance and ethics officer with the
day-to-day design and implementation of the
program. Under the program, an Alaska Air
Group risk matrix has been developed and
the organization’s most prominent risks
have been identified, responsibility has been
assigned to appropriate executives, and
assignments have been aligned for
appropriate Board oversight, including
oversight of safety-related risks by the
Board’s Safety Committee. Responsibility for
managing these risks includes strategies
related to both mitigation (acceptance and
management) and transfer (insurance). The
risk matrix is updated regularly. At a
minimum, the Audit Committee receives
quarterly updates regarding the program and
an annual in-person review of the program’s
status by the chief risk, compliance and
ethics officer.
The program also provides that the Audit
Committee work with the chief risk,
compliance and ethics officer and Air
Group’s management executive committee
to annually identify the most pressing risk
issues for the next year. This subset of the
risk matrix is then designated for heightened
oversight, including periodic presentations
by the designated management executive to
the appropriate Board entity. Furthermore,
these areas of emphasis regarding risk are
specifically reviewed and discussed with
executive management during an annual
executive officer planning session, held
during the third quarter of each year, and
are incorporated into the development of the
Company’s strategic plan for the coming
year.
As part of its oversight of the Company’s
executive compensation program, the
Compensation and Leadership Development
Committee, along with its independent
consultant and the Company’s management
team, has reviewed the risk impact of the
Company’s executive compensation. Based
on this review, the Company has concluded
that its executive compensation programs
do not encourage risk taking to a degree
that is reasonably likely to have a materially
adverse impact on the Company.
The Company believes that its leadership
structure, discussed in detail in “Board
Leadership” above, supports the risk
oversight function of the Board for the same
reasons that it believes the leadership
structure is most effective for the Company,
namely that, while facilitating open
discussion and communication from
independent members of the Board, it
ensures that strategic discussions are led
by an individual with a deep understanding
of the highly technical and complex nature of
the airline business.
ŠProxy
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