Risk management

Risk management and internal control

RMBH recognises that managing risk and compliance is an integral part of generating sustainable shareholder value and enhancing stakeholder interests.

The board and the boards of Group companies are accountable for establishing, maintaining and monitoring the effectiveness of the processes of risk management and systems of internal control applied throughout the group and in any joint ventures and associations to which the Group or any subsidiary is party.

The Group’s risk management and control framework covers the following key aspects:

identifying key performance indicators;
identifying significant business risks, both financial and other;
maintaining proper accounting records;
ensuring the reliability of financial information used within the business for decision-making or for publication;
ensuring compliance with applicable laws, regulations and codes of conduct;
ensuring that the Group is not unnecessarily exposed to avoidable financial risks such as the risks associated with fraud, potential liability and loss, including the safeguarding of assets;
managing potential conflicts of interest of management, board members and shareholders, including misuse of corporate assets and abuse in related party transactions;
ensuring the effectiveness and efficiency of operations;
monitoring the progress of Group companies in complying with the Financial Sector Charter;
ensuring that the Group and any projects in which it is involved are subject to sound environmental practices; and
ensuring that the appropriate balance is struck between entrepreneurial endeavour and sound business practice.

Overall effectiveness of control environment

As with most systems of internal control, the effectiveness of internal control systems in the Group is subject to inherent limitations, including:

the possibility of human error and/or poor decision-making;
the deliberate circumventing of controls by employees or others;
management overriding controls; and
the occurrence of unforeseeable circumstances.

Controls systems are therefore designed to manage, rather than eliminate, the risk of failure. Accordingly, it is recognised that a sound system of internal control can provide only reasonable and not absolute assurance against risks impacting the achievement of business objectives or any misstatement or loss.

Management reports regularly to the respective Group boards on the effectiveness of the group’s risk and compliance management and control framework. The effectiveness of this framework is subject to continuous review.

During the period under review and up until the date of approval of the annual report and financial statements, nothing has come to the attention of the directors to suggest that any material breakdown in the functioning of the controls, procedures and systems, which could result in material losses, contingencies or uncertainties that would require disclosure in the financial statements, has occurred.