Kendrion's approach to risk management
Effective risk management is key to executing Kendrion’s strategy, achieving long-term value for Kendrion’s stakeholders, protecting the company’s reputation and ensuring good corporate governance. Kendrion promotes local entrepreneurship 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.
Effective risk management is an integral element of good business practice. Kendrion’s risk management approach comprises two main complementary elements: a top-down strategic view of risk at the enterprise level and a bottom-up view of risk at the operational level. 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. The Executive Board and the Management Team periodically review and discuss Kendrion’s approach to risk management, including Kendrion’s risk appetite. The outcome of this periodic review is subsequently presented to and discussed with the Audit Committee before being presented to the Supervisory Board. The Executive Board strives to balance business opportunities with the reasonable expectations of shareholders, employees, regulators and other stakeholders.
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 and well-defined Enterprise Risk Management Framework that connects the various elements of risk management and the relationship between these elements. The factors that underpin the quality of the Enterprise Risk Management Framework are integrity, business ethics and the employees’ expertise. Management style and the manner in which authorisations and responsibilities are delegated and monitored by the management are equally important.