Dave Forsey Chief Executive 19 July 2012 - Sports Direct International

30 / THE BUSINESS REVIEW
Chief Executive’s Report
Risks and uncertainties
The Board has a responsibility to govern the Group in the interest of the shareholders.
The Board is responsible for deciding the objectives and the overall strategy for the
Group and part of this involves taking risks. Risks are an inherent part of the business
world, so to minimise the effect of potentially damaging effects to the Group, the
Board ensures there is a framework of controls and robust procedures which allows
risk to be monitored and managed effectively.
The Group’s Approach to Risk
The identification and management of risk is a continuous process,
and the Group’s system of internal controls and the business
continuity programmes are key elements of that. The Group maintains
a system of controls to manage the business and to protect its assets
with the development of contingency plans and rapid response to
changing circumstances and does much to mitigate the risks facing
the Group. The Group continues to invest in people, systems and in
IT to manage the Group’s operations and its finances effectively
and efficiently.
The diagram below details the Group’s risk management process
1. The risks are identified and evaluated
2. Action is taken to manage the risk
3. The practices are reviewed and monitored to limit the risk
Executive management in each business within the Group is
responsible for the identification, evaluation and management of
the significant risks applicable to their areas of business.
The members of the Board and Audit Committee are provided
with details of the risks that have been identified and evaluated by
Executive management, these are reviewed and monitored. The
Board ensures that the appropriate arrangements are in place under
which employees can raise concerns about possible financial or other
impropriety which are then appropriately investigated.
The Audit Committee assists the Board in fulfilling its oversight
responsibilities, reviewing the reporting of financial and non-financial
information to shareholders and the audit process, satisfying itself that
appropriate systems of internal control and risk management are in
place and are serving to identify and manage risk.
The Group operates a Retail Support Unit which provides strong
operational internal audit services in the Retail division, and there
are procedures in place in the Brands division to monitor and
control licensees.
The auditors attend all meetings of the Audit Committee, save
for those parts of any meeting when the Committee reviews the
performance of the auditors and when the Committee is having
separate discussions with the Group Finance Director.
With the exception of Heatons, the Group’s only material associate,
the Group’s system of internal control and risk management and
its effectiveness is monitored and reviewed by the Board, the Audit
Committee and management. The Board believes that the Group has
maintained throughout the Year and up to the date of approval of the
annual report and accounts an effective embedded system of internal
control and has complied with the Turnbull guidance.
The systems of internal control and risk management are designed
to manage, rather than eliminate, the risk of failing to achieve
business objectives.
Risk Policies and Procedures
Business plans and budgets for each business include financial
and strategic targets against which performance is monitored.
Monitoring includes the examination of and changes to rolling annual
and quarterly forecasts, monthly measurement of actual achievement
against key performance targets and plans, and weekly reviews
of performance.
The Group has clear procedures for the approval and control of
expenditure. Strategic investment decisions involving both capital
and revenue expenditure are subject to formal detailed appraisal
and review according to approval levels set by the Board. Operating
expenditure is controlled within each business with approval levels for
such expenditure being determined by the individual businesses.