HSBC 2005 Annual Report Download - page 212

HSBC HOLDINGS PLC
Report of the Directors (continued)
210
Directors on appointment includes reputational
matters.
Reputational risks, including SEE matters, are
considered and assessed by the Board, the Group
Management Board, subsidiary company boards,
board committees and/or senior management during
the formulation of policy and the establishment of
HSBC standards. Standards on all major aspects of
business are set for HSBC and for individual
subsidiary companies, businesses and functions.
These policies, which form an integral part of the
internal control systems, are communicated through
manuals and statements of policy and are
promulgated through internal communications and
training. The policies cover SEE issues and set out
operational procedures in all areas of reputational
risk, including money laundering deterrence,
environmental impact, anti-corruption measures and
employee relations. The policy manuals address risk
issues in detail and co-operation between head office
departments and businesses is required to ensure a
strong adherence to HSBC’s risk management
system and its corporate social responsibility
practices.
Internal controls are an integral part of how
HSBC conducts its business. HSBC’s manuals and
statements of policy are the foundation of these
internal controls. There is a strong process in place
to ensure controls operate effectively. Any
significant failings are reported through the control
mechanisms, internal audit and compliance functions
to subsidiary company audit committees and to the
Group Audit Committee, which keeps under review
the effectiveness of the system of internal controls
and reports regularly to HSBC Holdings’ Board. In
addition, all HSBC businesses and major functions
are required to review their control procedures and to
make regular reports about any losses arising from
operational risks.
HSBC provides information in its Corporate
Social Responsibility Report and website
(www.hsbc.com/csr) on the extent to which it has
complied with its social, ethical and environmental
risk management policies. Aspects covered include:
how HSBC is implementing and applying the
Equator Principles to manage the environmental and
social risks in project finance; employee diversity;
environmental management; and health and safety.
HSBC is using the guidelines of the Global
Reporting Initiative in producing its 2005 Corporate
Social Responsibility Report. Third party scrutiny of
the assertions made in the report is provided through
an assurance process conducted by URS Verification
Limited, including a commentary in the report and
on the HSBC website. HSBC’s direct environmental
performance data is verified by Den Norske Veritas.
HSBC also participates in the Dow Jones
Sustainability Index, FTSE4Good and Business in
the Community’s Environment Index. HSBC’s
Corporate Social Responsibility Report 2005 will be
available at www.hsbc.com/csrreport from late-April
2006.
Financial risk management
The financial risk management objectives and
policies of HSBC Holdings and its subsidiary
undertakings included in the consolidation, in
relation to the use of financial instruments, together
with an analysis of the exposure to price, credit,
liquidity and cash flow risks, as required under the
Companies Act and International Financial
Reporting Standards are set out in the risk
management section of the Financial Review on
pages 115 to 172 and in Note 17 and part of Note 47
on the Financial Statements on pages 285 and 375
respectively.
Health and safety
The maintenance of appropriate health and safety
standards throughout HSBC remains a key
responsibility of all managers and HSBC is
committed to actively managing all health and safety
risks associated with its business. HSBC’s objectives
are to identify, remove, reduce or control material
risks of fires and of accidents or injuries to
employees and visitors.
Health and Safety Policies, Group standards and
procedures are set by Group Fire and Safety and are
implemented by Health, Safety and Fire Co-
ordinators based in each country in which HSBC
operates.
HSBC faces a range of threats from terrorists
and criminals across the world. In particular, over
recent years the threat from international terrorism
has become significant in a number of areas where
HSBC operates. This threat has mainly manifested
itself in bomb attacks such as the one in Istanbul in
2003 in which HSBC’s Turkish headquarters
building was attacked. Despite suffering tragic loss
of life and major damage, existing security measures
and well-managed contingency procedures ensured
the business was able to return to normal operations
the following day.
Group Security provides regular risk
assessments in areas of increased risk to assist
management in judging the level of terrorist threat.
In addition, Regional Security functions conduct
regular security reviews to ensure measures to