Effective risk management is key to ensuring the continued long-term viability of the Group. It is embedded within all of our operating companies. Everyone in the Swire Pacific group has a role to play in risk management. It is essential that we all work together to address the risks to which our Group is exposed.
Sustainability issues are relevant to risk management. They include climate change, political and regulatory risks, and emerging risks such as climate resilience and biodiversity. The Board of Directors and the management of each division are responsible for identifying and analysing the risks (including those relating to sustainability) underlying the achievement of business objectives and for determining how to manage and mitigate such risks.
There are two key management committees which monitor the risks affecting the Group – the Group Risk Management Committee (GRMC) and the Finance Committee. These committees comprise members of senior management and are both chaired by the Finance Director, who reports significant matters to the Board as they arise.
The GRMC, which is made up of divisional chief executives and managing directors, and is chaired by the Finance Director, reports to the Board via the Audit Committee.
We use an enterprise risk management (ERM) process to identify, assess, monitor and manage risks. The implementation and execution of the ERM process follows our enterprise risk management policy. The objective of the policy is to ensure that robust and effective risk management systems are in place to enable management to identify, prioritise and mitigate the risks to which our operating companies are and will be exposed. Each division and major operating company is required to implement the ERM process.
As part of this policy, operating companies must regularly submit corporate risk registers and changes in risk profiles to Swire Pacific. To ensure consistency of approach, these registers are prepared using a standard methodology, format and standard risk ranking criteria.
For our company to continue to grow, we must anticipate the risks threatening our development and that of our clients and we must capitalise on new opportunities. We monitor key emerging risks. Early detection helps to protect our business.
Every year, Swire Pacific engages with people inside and outside of the organisation to assess the material risks that might have an impact on its business. The output from that engagement in 2018 is presented below.
In the interactive sustainability risks map, you can filter material issues by the category of the issue or by business and stakeholder priority. The size of the issue displayed corresponds with its importance.
In 2018, we highlighted four potential emerging risks.
Climate change gives rise to significant risks to our business. The risks include the impact of extreme weather events on our physical assets, the financial costs of changing to new sources of energy and the environmental and social impact of greenhouse gas emissions.
Regulations affecting and public scrutiny of our products and services and their uses could have an adverse impact on our operations, finances and reputation.
Cyber attacks have the potential to disrupt our business.
* In October 2018, Cathay Pacific announced that it had discovered unauthorised access to some of the passenger data of Cathay Pacific and Cathay Dragon. Immediate action was taken to contain the event and commence a thorough investigation. There is no evidence that any personal information has been misused. The information systems affected were separate from flight operations systems. There was no impact on flight safety.
Health and safety incidents can lead to casualties, property damage, production and service delays, disruption to our business and damage to our reputation.
We regularly review our policies relating to sustainability. Where we identify policy gaps, we try to create new policies to guide the Group’s approach. In 2019, we are introducing policies on waste, water and human rights. We are also reviewing and updating our sustainable food policy, our supplier corporate social responsibility code of conduct and our sustainable building design policy.
Policies are developed at the working group level, before review by the Swire Group Sustainability Committee (SGSC) and the GRMC and final approval by senior management including the Chairman. The management of risks and the implementation of sustainability policies are subject to scrutiny by our internal audit department as part of the standard internal audit processes, with support from specialist external consultants where necessary.
Please refer also to the Risk Management section of the Corporate Governance Report in the Swire Pacific Annual Report 2018.