Risk management forms an integral part of doing business at Bang & Olufsen. At Bang & Olufsen, a risk is defined as an event or a development that could significantly reduce Bang & Olufsen’s ability to achieve the company’s financial targets, execute the company’s strategy or maintain the company’s license to operate.
The risk management system applied at Bang & Olufsen is designed to balance risk and reward throughout the company’s operations in alignment with the established risk appetite to generate maximum value to shareholders and other stakeholders.
By strongly focusing on enterprise risk management processes, the Executive Management Board and the Board of Directors can ensure that risk management forms an integral part of decision-making processes at Bang & Olufsen. The risk management process is constantly evolving, with Bang & Olufsen continuing to improve work on identifying, evaluating and monitoring relevant risks.
The risk governance structure is used to assign roles, responsibility and accountability for decisions concerning risk and mitigations in Bang & Olufsen. The roles and responsibilities are structured in a three-level structure with a Governance level first followed by an Executive level and finally an Operational risk management level.
At the Governance level, the Board of Directors is responsible for monitoring the risk management procedures and approval of Bang & Olufsen's annual risk profile and appetite. The Board of Directors has appointed the Audit Committee as the body responsible for monitoring and evaluating the effectiveness of the risk management procedures, including reviewing the overall risk profile and appetite as well mitigating activities identified. Relevant top risks are identified, monitored, mitigated and reported to the Board of Directors through an enterprise risk management process, which follows an annual wheel.
At the Executive level, the Executive Management Board is responsible for maintaining an effective enterprise risk management process thereby ensuring that top risks and strategies are appropriately managed and aligned with the established risk appetite.
Top risks and possible new risks identified are discussed by the Executive Management Board on a quarterly basis. The purpose of this process is to stay focused on top risks and to identify potential new risks as early as possible. This enables the Executive Management Board to take a proactive approach to adopting business processes and controls to meet, manage or mitigate such risks, or to prevent potential increases in the level of exposure.
Risk owners and risk responsibles are appointed for each of the identified top risks. All identified top risks are anchored with a member of the Group Management Team. The risk owner is responsible for ensuring that;
- the appointed risks are analysed and
- underlying risk drivers defined, and
- mitigation plans are developed, implemented and monitored.
Risks identified are evaluated based on their possible impact on several criteria, including compliance, reputational and financial impact, and the likelihood of the risk materialising. Clear roles and responsibilities are assigned in relation to top risks, and mitigation initiatives and KPIs to monitor progress are identified, prioritised and continually monitored.