Lead Manager

SECTION 4
BOARD, MANAGEMENT AND CORPORATE GOVERNANCE
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window being open if the relevant person is in possession of non-public price sensitive information regarding the
Group.The Board may authorise the opening of trading windows at other times.
In the case of an intended sale of any Shares held by a Shareholder who holds Shares to which the voluntary
escrow restrictions apply (as described in Section 4.7.8), notice must be given to the Group within the first week
of a trading window of the intended sale.This notice will authorise (but not oblige) the Group to arrange the
sale of the Shares on behalf of the holder within certain price parameters.This policy is intended to give the
Group the opportunity to maintain an orderly market.
4.9 RISK MANAGEMENT
4.9.1 Introduction
Management of risk, particularly preservation of capital, has been a primary objective of Babcock & Brown in all
of its business activities.
The principal features of Babcock & Brown’s risk management strategy are:
• Centralised decision-making on all activities involving the commitment of capital
• Involvement of the Group’s most senior Executives in major decisions
• Defined limits of authority for Executives to commit capital
• Strict limits on the maximum capital that can be committed in any one Business Group or operating region
• Generally quarantining the risks associated with a specific investment within a special purpose vehicle
• Allocating risks to the parties best able to manage them
The Audit and Risk Management Committee of the Board will work closely with management to enhance the
Group’s Risk Management Framework as the Group prepares to expand its activities through the deployment of
the capital raised in the Offering.
4.9.2 Risk Management Framework
The Board is the principal decision-making body for matters involving the Risk Management Framework
including the commitment of the Group’s capital. All capital commitments above a certain threshold must be
approved by the Board.The Board has delegated to the Executive Committee authority to commit capital below
a certain threshold and a select number of senior Executives have the authority to commit capital below this
threshold in certain defined areas of activity within their scope of expertise.
A formal submission must be made before any approval to commit capital is given. Legal, accounting, tax and
general risk management issues are considered as part of the investment approval process. Any submission must be
given with sufficient notice for the Board, Executive Committee or the responsible Executives (as applicable) to
consider it prior to approval.
4.9.3 Risk monitoring
The Executives responsible for a business or investment position or activity have primary responsibility for
monitoring the associated risks, including taking the necessary actions to ensure that the Group’s capital is
preserved. Executives must demonstrate their expertise and experience in an area of activity before they are given
such risk management responsibility.
The Audit and Risk Management Committee will monitor the risks across the Group’s portfolio of investment
positions and business activities and will meet as often as required but at least quarterly.
4.9.4 Investment structuring
Babcock & Brown generally structures its investments in a manner to minimise risk to its other investments and
business activities, and with the aim of transferring specific classes of risks to the parties best able to manage them.
The majority of Babcock & Brown’s investments are made through special purpose vehicles and funded with debt
that has no or limited recourse to the wider Group. In this way, if the value of the asset were to fall below the
amount of debt outstanding, it would have no financial impact on the Group’s other investments and activities.