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2015 Ramsay Health Care Limited Annual Report

16 Risk Management The Company has developed a governance structure for oversight of risk whereby material business risks can be identified at an operational level and managed and reported, ultimately to Board level, via the Risk Management and Audit Committees. The structure also allows for top-down management of risks identified at Board or Board Committee level. The Company’s system of reporting encompasses both formal and informal channels. The Board has ultimate responsibility for the oversight of enterprise risk management and satisfying itself that the risk management framework is sufficiently robust and sound. The Board has allocated responsibility for managing the Company’s risks as follows: (a) The Board is responsible for managing strategic and political risks (including those associated with merger and acquisition activity). (b) The Audit Committee is responsible for managing direct financial risks to the Company and for matters relating to tax and accounting. (c) The Risk Management Committee (RMC) is responsible for managing all other enterprise risks, with particular focus on clinical, workplace health and safety and environmental risks. Strategic and operational risks are considered at least annually by all operating divisions as part of the annual strategic planning, forecasting and budgeting process. Each facility is responsible for the development and maintenance of a risk management plan identifying material risks, developing strategies for dealing with those risks and developing and testing controls. The Company’s Risk Management Framework The Company has in place a Risk Management Framework which is consistent with current practice and the Standard AS/NZS ISO 31000:2009 Principles and Guidelines for Risk Management. The Risk Management Framework: • provides a Group-wide approach which outlines the structure and policies applicable to the proactive identification, assessment, management, reporting and oversight of risks, particularly material business risks; • encompasses all areas of risk with the capacity to adversely affect the business of the Group, such as financial, strategic, clinical, safety, environmental and legal risks; • emphasises a collaborative approach by all stakeholders to the identification of risks, the importance of clear communication of initiatives and strategies to manage identified risk and reinforcement of compliance with such initiatives as an integral part of corporate culture; and • provides guidance on risk treatment and prioritisation. Our material business risks (including economic risks), together with our approach to managing those risks, are outlined in the Operating and Financial Review section of our Annual Report. The Company does not consider that it has any material environment or social sustainability risks (as those terms are defined in the ASX Recommendations). Risk Management Committee The RMC oversees and drives improvement in risk management practices in relation to patient safety, workplace health and safety and the operational environment (e.g. IT/cybersecurity, building and facilities and regulatory compliance). The Committee helps drive a positive culture towards risk management that promotes open disclosure and quality improvement in risk management activities in these key areas. The RMC is also responsible to the Board for: • oversight of the establishment and implementation of the Risk Management Framework; and • annually reviewing the effectiveness of the Risk Management Framework in identifying and managing risks and controlling internal processes. There are currently ten members on the RMC comprising a mix of Non-Executive Directors (four), executive Directors (two) and senior executives/management personnel (four). Given the nature of the risks inherent in owning hospitals on an international scale, the Board has decided that it is in the Company’s best interests for the RMC to include a strong senior executive/ management presence to ensure that the Committee has the necessary technical and industry knowledge available to it at all times. Despite the RMC not being comprised of a majority of independent Directors, the Board considers that the RMC operates efficiently and effectively in bringing transparent, focused and professional judgement in overseeing the Company’s risk management framework. The current membership, independence of, and details of RMC meetings and attendance by each Director RMC member are set out earlier in this Corporate Governance Statement. Further, the relevant experience and qualifications of the Director members is set out in the Board of Directors’ section of this Annual Report. The RMC reviews the Risk Management Framework at least annually. The RMC undertook a comprehensive review of the Risk Management Framework in 2015 and is satisfied that it continues to be sound. 28 RAMSAY HEALTH CARE ANNUAL REPORT 2015


2015 Ramsay Health Care Limited Annual Report
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