Unilever 2011 Annual Report Download - page 36

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Our Risk Appetite and Approach to Risk Management
Risk management is integral to Unilever’s strategy and to the
achievement of Unilever’s long-term goals. Our success as an
organisation depends on our ability to identify and exploit the
opportunities generated by our business and the markets we are in.
In doing this we take an embedded approach to risk management
which puts risk and opportunity assessment at the core of the
leadership team agenda, which is where we believe it should be.
Unilever adopts a risk profile that is aligned to our vision to double
the size of our business while reducing our environmental impact.
Our available capital and other resources are applied to underpin
our priorities. We aim to maintain a strong single A credit rating
on a long term basis, reflecting the strength of our balance sheet
and cash flows.
Our approach to risk management is designed to provide
reasonable, but notabsolute, assurance that our assets are
safeguarded, the risks facing the business are being assessed
and mitigated and all information that may be required to be
disclosed is reported toUnilever’s senior management including,
where appropriate, the Chief Executive Officer and Chief Financial
Officer.
Organisation
The Unilever Boards assume overall accountability for the
management of risk and for reviewing the effectiveness of
Unilever’s risk management and internal control systems.
The Boards have established a clear organisational structure
withwell defined accountabilities for the principal risks that
Unilever faces in the short, medium and longer term. This
organisational structure and distribution of accountabilities and
responsibilities ensures that every country in which we operate
has specific resources and processes for risk review and risk
mitigation. This is supported by the Unilever Leadership Executive,
which takes an active responsibility for focusing on the principal
areas of risk to Unilever. The Boards regularly review these risk
areas and retain responsibility for determining the nature and
extent of the significant risks that Unilever is prepared to take to
achieve its strategic objectives.
Foundation and Principles
Unilever’s approach to doing business is framed by our Corporate
Mission. 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
categories, geographies and functions. A network of Code
Officers and Committees supports the activities necessary to
communicate the Code, deliver training, maintain processes and
procedures (including ‘hotlines’) to report and respond to alleged
breaches, and to capture and communicate learnings.
We have a framework of Code Policies that underpin the Code and
set out the non-negotiable standards of behaviour expected from
all our employees.
Unilever’s functional standards define mandatory requirements
across a range of specialist areas such as health and safety,
accounting and reporting and financial risk management.
Processes
Unilever operates a wide range of processes and activities across
all its operations covering strategy, planning, execution and
performance management. Risk management is integrated into
every stage of this business cycle. These procedures are
formalised and documented and are increasingly being
centralised and automated into transactional and other
information technology systems.
Assurance and Re-Assurance
Assurance on compliance with the Code of Business Principles
and all of our Code Policies is obtained annually from Unilever
management via a formal Code declaration. In addition, there are
specialist compliance programmes which run during the year and
vary depending on thebusiness priorities. These specialist
compliance programmes supplement the Code declaration. Our
Corporate Audit function plays a vital role in providing to both
management and the Boards an objective and independent review
of the effectiveness of risk management and internal control
systems throughout Unilever.
Boards’ assessment of compliance with the Risk Management
frameworks
The Boards, through the Committees where appropriate,
regularly review the significant risks and decisions that could
have a material impact on Unilever. These reviews consider the
boundaries to the risks that Unilever is prepared to take in pursuit
of the business strategy and the effectiveness of the management
controls in place to mitigate the risk exposure.
The Boards, through the Audit Committee, have reviewed the
assessment of risks, internal controls and disclosure controls
and procedures in operation within Unilever. They have also
considered the effectiveness of any remedial actions taken for the
year covered by this document and up to the date of its approval by
the Boards.
Details of the activities of the Audit Committee in relation to this
can be found in the Report of the Audit Committee on pages 47
and 48.
Further statements on compliance with the specific risk
management and control requirements in the Dutch Corporate
Governance Code, the UK Corporate Governance Code, the US
Securities Exchange Act (1934) and the Sarbanes-Oxley (2002) Act
can be found on pages 44 to 46.
Unilever Annual Report and Accounts 2011
Report of the Directors About Unilever