Annual report 2010 - Imperial Tobacco Group

Principal Risks and UncertaintiesA detailed assessment ofstrategic risks within ouroperating environment isundertaken by managementand is embedded acrossthe Group.How we manage riskOperating Executive and Audit CommitteeRisk Co-ordination CommitteeAssessGroup Risk registerRankIdentifyMitigateMonitorRisk Management OverviewThe Risk Co-ordination Committee (RCC) assists theOperating Executive and the Audit Committee in overseeingthe management of material risks. The RCC is responsible forestablishing a consistent methodology for the identification,assessment and ranking of material risks to the Group, aswell as identifying and assessing existing measures in placeto manage and mitigate those risks. The RCC maintainsa Group risk register which covers a number of strategic,operational, financial, legal, environmental, community,ethical and reputational risks. These are integrated intoour decision-making and risk assessment processes.We are subject to the same general risks and uncertaintiesas any other business; for example, changes in generaleconomic conditions, including currency and interest ratefluctuations, changes in taxation legislation, the cost of ourraw materials and the impact of competition, political stabilityin the countries in which we operate and source our rawmaterials and the impact of natural disasters.We outline below the principal risks and uncertainties thatare specific to and may impact on our business.Not all these factors are within the Group’s control. Theremay be other risks and uncertainties which are unknown tothe Group, or which may not be material now, but could bematerial in the future.Risk Identification and EvaluationEach area of the business is required to formally review itsprincipal areas of risk and uncertainty so that major risksare reviewed at all levels across the Group. This requiresindividual markets, factories, regions and functions acrossthe Group to produce annual risk assessment summarieswhich are compared to the Group risk register. Theseongoing risk assessment summaries identify major areas ofrisk, including specific local risks and how they are mitigatedand managed by controls embedded in business processes.This bottom up approach complements the top downapproach of the RCC.Markets, factories, regions and functions25