Managing our Risks
Risk is inherent in all business activities. We maintain a comprehensive risk management framework that serves to identify, assess and respond to our principal risks. Our approach is not intended to eliminate risk entirely, but rather to provide the structural means to identify, prioritise and manage the risks involved in our activities in order to support our value creation objectives.
The Board of Directors is responsible for maintaining the Company’s risk management and internal control systems. The Board’s mandate includes defining risk appetite and monitoring risk exposures to ensure that the nature and extent of significant risks taken by the Company are aligned with our overall goals and strategic objectives.
In accordance with our governance practices, the Audit Committee supports the Board of Directors in monitoring the Company’s risk exposures and is responsible for reviewing the effectiveness of the risk management and internal control systems. The Risk Manager and Internal Audit support the Audit Committee in evaluating the design and operating effectiveness of the risk mitigation strategies and the internal controls implemented by management.
Executive Management reviews strategic objectives and risk appetite, assesses the level of risk related to achieving these objectives, and incorporates controls into the strategic and operating plans to mitigate them. This top-down risk identification and assessment process helps to ensure that the bottom-up process performed at the business unit level is aligned with and focused on current strategy and objectives.
Risk heat map
This risk heat map illustrates the relative positioning of our principal risks in terms of impact and likelihood;
Risk Management System
The annual and ongoing elements of the Group’s risk management process are controlled by well-established risk identification, assessment and monitoring processes. We have progressed in embedding a risk management culture amongst all employees, however this is an ongoing process and we are still working to demonstrate this with evidence collected through the monitoring of our controls to mitigate risks.
We have continued to build on our existing risk management framework, enhancing risk management and internal control systems across the business in line with changes to the UK Corporate Governance Code.
In addition to the permanent risk management activities, our priority for 2016 is to continue promoting a ‘monitoring environment’ which consists of validating the effectiveness of our current controls in order to support the Board in their responsibilities, which include monitoring and reviewing risk management and the internal control systems.
2015 Risk Assessment
We believe there were a number of developments in 2015 that have the potential to adversely impact the entire Mexican mining industry. These include Mexico’s transition towards indigenous consultation (which is an emerging initiative but worth monitoring); the perceived level of corruption across Mexico remaining high; continued legal challenges to the mining industry by individuals and local communities who may seek to disregard previous land agreements; and due to lower metal prices, profit levels have been impacted and also profit sharing to employees and union workers has decreased.