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Kendrion promotes local entrepreneurship at its companies and, consequently, offers scope to the management to exercise the associated discretionary powers. Kendrion actively conveys the essential need to maintain a healthy equilibrium between entrepreneurial spirit and the extent to which risks are accepted. Adequate risk management is an integral element of good business practice. When risks are made visible Kendrion’s managers can implement adequate measures in their everyday management that offer them optimum control of the risks. Kendrion’s risk management is not intended to eliminate all risks entirely: seeking business opportunities is not without risks. Kendrion’s objective is to adopt an approach to business risks that minimises surprises and the impact of any surprises that nevertheless occur, while always taking into account the necessary balance between risk exposure and costs. Kendrion’s risk-reward appetite is periodically evaluated by the Executive Board and shared and discussed with the Supervisory Board, the Executive Board and the Management Team. The Executive Board balances business opportunities with the expectations of shareholders, employees, regulators and other stakeholders.
|Risk category||Kendrion's risk-reward appetite|
|Strategic risks||Moderate: strike appropriate balance between risk and reward|
|Operational risks||Moderate: align targets and the related costs, focus on sustainable profit maximisation|
|Financial reporting risks||Low: full compliance with financial reporting rules and regulations, transparency|
|Compliance and fraud risks||Low: full compliance with the relevant legislation and regulations|
Kendrion has a responsibility to put internal controls and procedures into place and test them to verify their adequate performance. Local management is expected to be fully aware of the operating risks and the necessity for internal control procedures. Kendrion has devoted structural attention to the optimisation of the risk management and control system as part of the everyday decision-making. The Executive Board wishes to emphasise that risk management and control systems – no matter how professional they may be – can neither offer absolute guarantees that the company’s objectives shall be achieved nor entirely prevent material errors, loss, fraud, or violations of laws or regulations.
Kendrion employs a structured risk management framework that reveals the various elements of risk management and the relationship between the elements. Kendrion’s objective is to avoid duplication within separate systems whenever possible. Links are made, when this is worthwhile, between systems where they interact. The factors that underpin the quality of the risk management framework are integrity, business ethics and the staff’s expertise, the management style and the manner in which authorisations and responsibilities are delegated and monitored by the management.