Managing Risk

 

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Our approach 

The Group believes that risk management is a fundamental part of robust corporate governance and good management practice. Good risk management does not mean avoiding risks at any cost but rather making informed and coherent choices regarding the risks the Group and its funds want to take in pursuit of their strategies and objectives, having regard to the methods used to manage and mitigate those risks. Accordingly, risk management is embedded within all areas of the business, both at a Group and legal entity level, including in culture, decision-making processes, practices, business planning and reporting activities.

The Group manages a variety of risks in connection with its business activities, and the Board is ultimately responsible for oversight of the Group’s risk management and internal control systems. This includes determining the nature and extent of the principal risks that the Board is willing to take in order to achieve the Group’s strategic objectives, and reviewing management’s implementation of effective systems of risk identification, assessment and management.

The Board is assisted in its risk management role by the Audit and Risk Committee, which monitors and reviews the Group’s internal controls and risk management systems.

The Group’s risk management framework is underpinned by a strong control culture with clear oversight responsibilities. The team also carries out thematic compliance monitoring work. The Group maintains comprehensive insurance cover with a broad range of policies covering a number of insurable events. During 2022, to support the monitoring and review of risks, it is expected that an internal audit programme will be adopted, supported by an outsourced internal auditor.

Risk management process

The Group undertakes the following process to identify, monitor and manage risks:

  1. Set strategy – The Board considers and approves the Group’s strategy, which forms the basis of the Group’s risk identification process and risk appetite, allowing those risks that may impact achievement of strategic objectives to be focused on.
  2. Identify risks – Periodically an exercise is undertaken to identify the key and emerging risks facing the Group.
  3. Evaluate risks – The Group evaluates risks based on two key factors: the likelihood of the risks eventuating, and the impact on the Group were the risks to eventuate (both financially and in respect of other matters such as reputation). The relevant risks are categorised and rated based on the cumulative impact of these two factors.
  4. Manage and mitigate risks – Mitigating actions are identified for each risk, taking into account the effectiveness of the current control environment. Where appropriate, changes to the control environment are identified and implemented.
  5. Monitor and review risks – The Group undertakes ongoing monitoring of risks identified and the effectiveness of mitigants implemented.

Key risks

The Group’s risk management system is designed to identify a broad range of risks and uncertainties which it believes could adversely impact the profitability or prospects of the Group, and a similar process is undertaken with respect to risks facing funds managed by the Group. As part of this process, ESG-related risks are considered.

The following pages set out the Group’s key risks identified and the primary mitigating actions implemented for each risk. These key risks may change over time as some risks assume greater importance and others may become less significant.

The key risks are identified based on the Group’s combined assessment of the likelihood and impact of each risk eventuating after the Group’s controls and other mitigating actions are taken into account.

Additional risks and uncertainties the Group may face, including those that are not currently known or that the Group currently deems immaterial, may individually or cumulatively also have a material effect on the Group’s business, results of operations and/or financial condition.

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