Our ERM programme
GKN’s enterprise risk management (ERM) programme facilitates a common, Group-wide approach to the identification, analysis, and assessment of risks and the way in which they are managed, controlled and monitored. Identify and analyse: A broad spectrum of risks is considered through the ERM process. The Executive Committee and the Board review the output from ERM at both divisional and Group levels. Manage and mitigate: Management controls designed to monitor and mitigate the risks are documented. Risk owners are assigned for each risk. Assess: The ERM process provides a consistent set of definitions and a common approach to risk evaluation and assesses both risk likelihood and impact.
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Ident if y an da n
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Respond: The risk response is based on the assessment of potential risk exposure and an acceptable level of tolerance. The response reflects whether we ‘accept’ the risk on the basis of its assessed level of exposure and mitigating controls currently in place, or ‘reduce’ the risk through additional mitigation to bring it in line with required levels of tolerance. Monitor: The output from the ERM process is regularly reviewed together with the ongoing monitoring of progress against planned improvement actions.
A ss e ss
Principal risks and uncertainties
The nature of both our business and our strategy means that we face a number of inherent risks and uncertainties. The Board has carefully considered the type and extent of the principal risks to the Group achieving its objectives and delivering a satisfactory return for shareholders. These are summarised below, categorised according to the strategic objective to which they relate most closely. All of our principal risks may also impact our objective to sustain above market growth. Over time our risk profile evolves and the Board’s view of the principal risks facing the Group is updated accordingly. This year, acquisition integration risk has been added as a principal risk in light of the ongoing integration of Fokker Technologies Group B. V. Each principal risk is described on the following pages together with the corresponding mitigating actions that are in place and an overview of the risk trends during 2015.
Risks related to our strategic objectives Other risks
Leading in our chosen markets
Leveraging a strong global presence
Driving operational excellence Differentiating ourselves through technology • Technology and • Acquisition integration innovation • People capability
• Highly competitive markets • Supply chain • Customer concentration • Operating in global markets • Joint ventures • Laws, regulations and corporate reputation
• • • • •
Product quality Contract risk Programme management Health and safety Information systems resilience
• Business continuity • Pension funding
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GKN plc Annual Report and Accounts 2015