Unilever 2009 Annual Report Download - page 38

Unilever Annual Report and Accounts 2009 35
Risk Management Approach
The identification and management of risk is integral to Unilever’s
strategy and to achieving its long-term goals. The Boards have
overall responsibility for the management of risk and for reviewing
the effectiveness of the system of internal control and risk
management approach.
We believe that good risk management is fundamental to good
business management and that our success as an organisation
depends on our ability to identify and then exploit the key risks
and opportunities for the business. Successful businesses
take/manage risks and opportunities in a considered, structured,
controlled and effective way. Our risk management approach is
embedded in the normal course of business and is summarised in
the diagram below.
Our approach is designed to provide reasonable, but not absolute,
assurance that our assets are safeguarded, the risks facing the
business are being addressed and all information required to be
disclosed is reported to the Group’s senior management including,
where appropriate, the Chief Executive Officer and Chief Financial
Officer.
Organisation
The Boards have established a clear organisational structure,
including formally delegated authorities, that responds to the
Principal Risk Factors that Unilever faces in the short, medium
and longer term.
Foundation and Principles
Unilever’s approach to doing business is framed by our Corporate
Mission & Purpose. Our Code of Business Principles sets out the
standards of behaviour that we expect all employees to adhere to.
Day-to-day responsibility for ensuring these principles are applied
throughout Unilever rests with senior management across regions,
categories, functions and operating companies. A network of
Code Officers and Committees support the responsible
operational leaders with the activities necessary to communicate
the Code, deliver training, maintain processes and procedures to
report and respond to alleged breaches (including ‘hotlines’) and
to capture and communicate learnings.
The implementation of and compliance with our Code and
other critical areas of risk that Unilever faces, including legal and
regulatory compliance, is facilitated through a business oriented
policy network. Each policy defines mandatory standards that are
applied consistently across the organisation. These policies are
broad-ranging in their nature including such areas as employee
health and safety, product safety and quality, the environment,
ethical research, use of certain ingredients in our products, risk
management, accounting and reporting, share dealing and
corporate disclosure, pension fund management, treasury
management, taxation and transfer pricing.
Processes
Unilever operates a wide range of processes and activities across
all its operations covering strategy setting, planning, execution and
performance management. These are formalised and documented
as procedures at a global, regional or local level as appropriate.
Increasingly, these procedures are being centralised globally and
automated into transactional and other information technology
systems.
Assurance and Re-Assurance
Senior management provides an annual Positive Assurance letter
addressed to the Chief Executive Officer confirming compliance
of their business unit with the Code of Business Principles and
applicable policies. Exceptions, if any, together with remedial
actions, form part of these written communications. A
consolidated version is presented to the Disclosure Committee
and the Board for their review.
There are also specialist ongoing compliance programs that
supplement the Positive Assurance exercise. Examples of these
include Health, Safety & Environment, Product Safety and Quality,
Information Technology, Finance and Pensions Management.
The Corporate Audit function plays a key role in providing to both
operating management and the Boards an objective view and
reassurance of the effectiveness of the systems of internal control
and risk management throughout Unilever.
Chairman, Board & Committees, CEO & Unilever Executive Committee
Corporate Purpose, Mission, Objectives and Code of Business Principles
Corporate Policies and Functional Standards
Governance of Unilever, Operating Framework, Roles & Responsibilities, Delegated Authorities
Performance
Management
Target Setting
Budgets
Reporting
Analysis
Remuneration
& incentives
Strategy
Setting
Operational
Planning
Business
Execution
Internal Assurance and
Compliance Monitoring
Internal Independent
Re-assurance
(Corporate Audit)
External Assurance
Organisation Foundation & Principles Processes Assurance & Re-assurance