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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 that offer optimal control of those risks. Of course, Kendrion’s risk management is not intended to eliminate all risks entirely: doing business is never without risks. Kendrion’s objective
is to adopt an approach to business risks that minimises the chance to have adverse events and the impact of such events, while always taking into account the necessary balance between risk exposure and costs. Kendrion’s risk appetite is periodically evaluated by the Executive Board and shared and discussed with the Supervisory Board and the Management Team. The Executive Board strives to balance 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|
|Compliance and fraud risks||Low: full compliance with relevant legislation and regulations in all jurisdictions where Kendrion operates|
The Supervisory Board oversees governance and risk control measures and evaluates the effectiveness of the implemented control measures. The Audit Committee prepares the decision-making of the Supervisory Board on risk management, compliance and audit matters. For further details on the Supervisory Board and the Audit Committee, reference is made to the ‘Corporate Governance’ section on pages 67-72 of the 2017 Integrated Annual Report.
Kendrion has a responsibility to put internal controls and procedures into place and test them to verify their effectiveness. Local management is expected to be fully aware of the operating risks and the necessity for internal control procedures. Kendrion devotes continual attention to the optimisation of risk management and control systems as part of the everyday decision-making. The Executive Board emphasises 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 connects the various elements of risk management and the relationship between the elements. Kendrion’s objective is to avoid duplication within separate risk management systems whenever possible. The factors that underpin the quality of the risk management framework are integrity, business ethics and the staff’s expertise. Management style and the manner in which authorisations and responsibilities are delegated and monitored by the management are equally important.