Jupiter Annual Report 2010 - Jupiter Asset Management

Governance | Directors’ report
Approach to risk
The Board determines the appropriate tolerance approach to its risks
within which the Group must operate. Risk tolerances are the Group’s
actual boundaries and limits through which the business monitors
and, if appropriate, escalates concerns to the Board. Risks and our
attitude to them are considered and monitored in six categories:
1
Strategic
risk: the risk that the Group is unable to
meet its strategic objectives due to matters inherent
in the nature of our business or the markets in which
we operate.
Depending on the risk category, the monitoring of these internally will
be owned by the Risk Committee or the Balance Sheet Management
Committee. If the latter has any concerns, these will then be
considered by the Risk Committee as well.
Internal control
The Board is responsible for the Group’s system of internal control
and for reviewing its effectiveness. Such a system can provide only
reasonable and not absolute assurance against material financial
misstatement or loss and is designed to mitigate, not eliminate, risk.
The Board, with the assistance of the Audit Committee, carried out its
annual assessment of the effectiveness of internal controls during
2010 using the following to support its conclusion:
2
Operational
3
Liquidity
4
Capital
5
Counterparty/credit
6
Regulatory/reputational
risk: the risk of loss caused by
weaknesses or failures in the Group’s systems and
controls, related to people, systems and process. These
include risks arising from failing properly to manage key
outsourced relationships.
risk: the risk that the Group may be unable to
meet its financial obligations.
risk: the risk that the Group may lack
sufficient capital to be able to continue to operate
as a going concern.
risk: the risk of loss caused
by the corporate failure of one of the trade, prime
brokerage or treasury counterparties to which the Group
may be exposed, or by a custodial institution with which
the Group has a relationship.
risk: the risk of censure due
to the Group’s failure to meet its regulatory obligations,
which may lead to reputational damage, a monetary
fine or ultimately the withdrawal of its licence to carry
out business.
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reports from the Compliance Director on the control environment
within the Group, highlighting any major instances of noncompliance
and the actions being taken to remedy such
non-compliance;
reports provided by the Compliance Director setting out the key
risks faced by the Group, and where appropriate quantifying these
exposures and the corresponding control mitigation in place within
the Group;
reports from the Group General Counsel outlining the Group’s
legal and litigation risks;
reports from the Internal Audit function on key control and
governance issues arising from their review programme;
an annual report from the MLRO on the anti-money laundering
and fraud prevention (financial crime) measures in place within
the Group;
a report from the external audit function on the internal control
framework in place within the Group (AAF01/06);
reports from the internal audit function on the control environment
in place within the Group and on the effectiveness of the risk
management and assurance processes; and
an annual ICAAP report providing assessment of the capital
required to support the business. This includes a series of stress
tests designed to address the potential impact of the material
risks facing the Group.
The Board is of the view that there is an ongoing process for
identifying, evaluating and managing the Group’s significant risks that:
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was in place for the year ended 31 December 2010 and up to the
date of approval of the Annual Report and Financial Statements;
is regularly reviewed by the Board and complies with the
Financial Reporting Council’s revised guidance for Directors
on internal control.
The Board is also of the view that:
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necessary actions have been, or are being, taken to remedy any
significant failings identified as part of the ongoing risk
management process.
no significant weaknesses were identified during the year.
Assurance process
The control environment in place across the Group is reviewed during
the course of a year by one or more of the four assurance functions
(Compliance, Operational Risk, Internal Audit and External Audit) and
assurance reports provided to senior management, the Board and
Audit Committee as appropriate.
On an annual basis, Jupiter commissions an independent firm of
external auditors to perform testing of the integrity of the Group-wide
control environment. Jupiter reports against the framework set out in
the technical release AAF 01/06 issued by the Audit and Assurance
Faculty of the Institute of Chartered Accountants of England and
Wales. The results of this testing, including any exceptions identified,
are made available to our institutional clients.
Annual Report & Accounts 2010 50 Jupiter Fund Management plc