Annual Report & Accounts 2010: Outlook and risks - Unilever

Report of the Directors About Unilever
Outlook and risks continued
Risk Management Approach
The identification and management of risk is integral to Unilever’s
strategy and to achieving its long-term goals. The Boards have
overall responsibility for the management of risk and for
reviewing the effectiveness of the system of internal control
and risk management approach.
We believe that good risk management is fundamental to good
business management and that our success as an organisation
depends on our ability to identify and then exploit the key risks
and opportunities for the business. Successful businesses
manage risks and opportunities in a considered, structured,
controlled and effective way. Our risk management approach
is embedded in the normal course of business and is summarised
in the diagram below.
Our approach is designed to provide reasonable, but not
absolute, assurance that our assets are safeguarded, the risks
facing the business are being addressed and all information
required to be disclosed is reported to the Group’s senior
management including, where appropriate, the Chief
Executive Officer and Chief Financial Officer.
Organisation
The Boards have established a clear organisational structure,
including formally delegated authorities, that responds to the
Principal Risk Factors that Unilever faces in the short, medium
and longer term.
Foundation and Principles
Unilever’s approach to doing business is framed by our Corporate
Mission. Our Code of Business Principles sets out the standards of
behaviour that we expect all employees to adhere to. Day-to-day
responsibility for ensuring these principles are applied throughout
Unilever rests with senior management across regions, categories,
functions and operating companies. A network of Code Officers
and Committees supports the responsible operational leaders
with the activities necessary to communicate the Code, deliver
training, maintain processes and procedures to report and
respond to alleged breaches (including ‘hotlines’), and to capture
and communicate learnings.
38 Unilever Annual Report and Accounts 2010
We have a framework of Code Policies that underpin the Code
and set out the non-negotiable standards of behaviour expected
from all our employees and those acting on our behalf. Unilever’s
Standards define detailed mandatory requirements for a range of
specialist areas. Together these cover many areas of the business
including employee health & safety, product safety & quality, the
environment, ethical research, use of certain ingredients in our
products, risk management, accounting and reporting, share
dealing, corporate disclosure, pension fund management,
treasury management and transfer pricing.
Processes
Unilever operates a wide range of processes and activities
across all its operations covering strategy, planning, execution
and performance management. These are formalised and
documented as procedures at a global, regional or local
level as appropriate. Increasingly, these procedures are being
centralised globally and automated into transactional and
other information technology systems.
Assurance and Re-Assurance
Senior management provide an annual Code and Code Policy
Declaration that is monitored by the Chief Legal Officer and
Regional Presidents.
There are also specialist ongoing compliance programmes that
supplement the Code and Code Policy declaration. Examples
of these include Health, Safety & Environment, Product Safety
and Quality, Information Technology, Finance and Pensions
Management.
The Corporate Audit function plays a key role in providing to both
management and the Boards an objective view and reassurance
of the effectiveness of the systems of internal control and risk
management throughout Unilever.