Business review Risk management
3i has a risk management framework which provides a structured and consistent process for identifying, assessing and responding to risks in relation to the Group's strategy and business objectives.
Introduction
Risk management operates at all levels throughout the Group, across business lines, geographies and professional functions. The Board is ultimately responsible for risk management, which includes the Group's risk governance structure and maintaining an appropriate internal control framework. Management's responsibility is to manage risk on behalf of the Board.
By reporting regularly to Audit and Compliance Committee, the Group's Compliance and Risk Assurance and Audit functions provide support to the Board in maintaining the effectiveness of risk management across the Group. Following a review of the Group's risk management processes in the year, a new monitoring framework was implemented, with a number of new committees providing input to Group Risk Management Committee. This became operational in March 2007 and formalised many existing practices. The diagram below shows this risk management framework and outlines the key responsibilities of each committee.
Risk governance
| Risk type | Further information | Risk mitigation |
|---|---|---|
| External | ||
| Risks arising from political, legal, regulatory, economic policy and competitor changes |
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| Strategic | ||
| Risks arising from the analysis, design and implementation of the Group’s business model, and key decisions on investment levels and capital allocations |
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| Investment | ||
| Risks in respect of specific asset investment decisions, the subsequent performance of an investment or exposure concentrations across business line portfolios |
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| Treasury and funding | ||
| Risks arising from (i) uncertainty in market prices and rates, (ii) an inability to raise adequate funds to meet investment needs or meet obligations as they fall due, or (iii) inappropriate capital structure |
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| Operational | ||
| Risks arising from inadequate or failed processes, people and systems or from external factors affecting these |
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