Marks and Spencer 2015 Annual Report Download - page 47

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OUR BUSINESS
OUR PERFORMANCEGOVERNANCE
FINANCIAL STATEMENTS
45
ANNUAL REPORT AND FINANCIAL STATEMENTS 2015
This year, we have placed signifi cant focus
on developing our approach to risk appetite
in line with the UK Corporate Governance
Code. By expressing the types and amount
of risk we are willing to take or accept to
achieve our plan, we aim to support
consistent, risk-informed decision-making
across the Group.
Our starting point has been to defi ne
draft risk appetite statements for our
principal risks, and for key decisions made
by the Board. These statements provide
parameters within which we typically
expect the business to operate, facilitating
structured consideration of the risk and
reward trade-o in the decisions we make
and in how the Group conducts business.
We have covered a wide range of risks from
GM ethical sourcing and food safety and
integrity, through to investment decisions
and business resilience. Given the varied
nature and diversity of such risks, there is no
‘one size fi ts all ’ approach to establishing risk
parameters. We believe that taking the
time to get this right will yield the greatest
benefi ts to our business and as such we are
currently working with management to
defi ne a draft set of risk statements which
we will refi ne over time to ensure that they
best refl ect what the Group stands for.
Providing clear parameters is important;
however, it is essential that we also foster
an environment where innovation and
entrepreneurial activities thrive. At times,
there may be merit in operating outside
of these risk parameters but proposed
exceptions will need to be escal ated to
senior management for debate and
approval before activities commence,
ensuring that appropriate mitigating
controls are in place.
Once fi nalised, our risk appetite statements
will be incorporated into an operating
framework, integrated with our existing
Group Risk process, and used to monitor
business activities and decision-making.
We believe we have made good progress
this year and risk appetite remains a key
priority for the Board in 2015/16.
Changes to the UK Corporate
Governance Code, which came into e ect
in October 2014, will require companies to
state whether they believe they will be able
to continue to operate and meet their
liabilities, taking into account their current
position and principal risks. Companies
will need to state over what period they
have made their assessment and why they
consider that period to be appropriate.
The assessed period must be longer than
12 months and relative to business planning
processes and how business performance
is measured.
On the surface this might appear to be a
simple statement to make. However, the
Code changes emphasise the need for an
interconnected approach to assessing
viability. The Board must take into account
the Company’s business model (and the
inputs which support it) and the strategy,
ensuring that these are aligned with its risk
appetite, supporting risk framework and the
controls and activities in place to mitigate
risk. The Code requires statements to be
made as a ‘reasonable expectation’ rather
than a certainty.
Whilst the Code changes are not applicable
to M&S until next year’s Annual Report,
elements of the Code change are aligned
with the principles of integrated reporting.
Both require some changes to a number
of our ways of working and, as part of our
commitment to producing an integrated
report next year, we have already made
progress. We are committed to ensuring
that our response to the Code change is
meaningful and adds value both within the
business and to our stakeholders. The work
we have in progress means that we are in a
strong position to meet the requirements
in next year’s Annual Report.
VIABILITY STATEMENT
RISK APPETITE
1
GM customer
engagement
12
GM supply
chain &
logistics
network
10
Sta
retention
2
Food safety
& integrity
3
Food
competition
8
International
expansion
7
M&S.com
business
resilience
5
Information
security
4
GM
margin
9
Our
people
6
IT
change
11
Programme
& workstream
management
See more in our
Risk management
section p23-25.