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OUR APPROACH TO RISK MANAGEMENT Risk quantification and analysis – summary of risks 35 30 25 20 15 10 5 0 Current financial risk, which accounts for 17%. Other risks, strategic risk and competitive and industry risks account for the balance of the Group’s risk profile. In our risk management process we try to quantify the potential losses should key risks materialise. For a wide variety of risks, we multiply the likelihood of the risk actually happening against the potential financial losses it might cause. Our ‘expected loss’ is the sum of all these factors put together. Furthermore, we conduct this risk-wide analysis in the face of four different scenarios of stress. Considering that these expected losses are scenariobased and represent potential losses related to our key risk exposures, we adopt processes to ensure these risks are promptly identified, properly mitigated and closely monitored on an ongoing basis, within acceptable limits. The approaches we adopt for maintaining an optimal risk environment on an ongoing and forwardlooking basis are: • Strategic planning that aligns risk strategy and appetite with commercial objectives • Continuous monitoring of approved risk targets set by the Board and Executive Management • Timely redress of threats by ensuring action plans for proper risk mitigation are closed out • Prompt reporting of key risks to management • Continuous implementation of all elements of the risk management framework, which also includes specific stress tests where applicable to underpin our monitoring of processes 3 yrs (improved controls) Outlook Economic growth has fallen in Africa because of falling oil prices and reduced demand for minerals. Governments have streamlined budgets with most, especially in the developing countries of Africa, being focused on capital projects with greater long-term benefits for their respective countries. Dangote Cement’s outlook is thus aligned with the focus of governments on spurring economic revival and growth through investments in infrastructure and building. This invariably presents an opportunity for the Company’s entrepreneurial vision for international growth, sustainability and the creation of value for shareholders. These drivers form the basis of our risk management practices, which are custom-made across the business. Our Risk Management team continues to ensure that the required framework for holistic, effective and efficient risk management is deployed across the organisation. In so doing, we will continue to ensure that financial and non-financial threats to our corporate goals are eliminated or minimised to the best of our efforts. Dr Adenike Fajemirokun, Group Chief Risk Officer 40 Annual Report 2016 Expected loss ₦B FX risk Operating efficiency IT risk Technical failure Competition / market Share Reputational risk Theft and fraud Health & Safety HR Liquidity (funding) risk Political / country risk Market (price) risk Investor perception Governance and risk oversight Terrorism Community relations/unrest Credit risk Overcapacity Legal risk Quality control Regulatory risk Reporting risk

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