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Risk management policy 

Objective

Australian Gas Networks’ (AGN) risk management system aims to provide a consistent process for the recognition and management of risks across the business.  The success of the system lies in the responsibility placed on all employees to actively identify, manage, review and report on risks relating to the areas of operation for which they are responsible.

 

Principles

The effective management of risk is central to the ongoing success of AGN. The purpose of this policy is to ensure that:

  • Appropriate systems are in place to identify, to the extent that is reasonably practical, all material risks that the Company faces in conducting its business;
  • The financial impact of those risks is understood, and appropriate controls are in place to manage exposures to them within acceptable tolerances;
  • Appropriate responsibilities are delegated to control the risks; and
  • Any material changes to the Company’s risk appetite are disclosed to its shareholders.

For the purpose of this policy, risk is defined as: “possible outcomes that could materially adversely impact on the Company’s financial performance, assets, reputation, people or the environment”.

Responsibilities under this Policy

The Board is responsible for:

  • Reviewing and approving the risk appetite of the Company and the policies and systems implemented for the ongoing identification, measurement and control of those risks;
  • Annual review of the Company’s financial capacity to absorb those risks and approving appropriate exposures and limits; and
  • Reviewing, with management, the systems and processes used to identify and manage risk.

The Board has delegated this activity to the Risk and Compliance Committee, and these accountabilities are identified in the Charter of that Committee.  The Risk and Compliance Committee is required to keep the Board informed on the Company’s compliance with the Risk Management Policy.

The Chief Executive Officer is responsible for:

  • Identification and control of risks, including operational and financial risk assessment of all significant investment decisions;
  • Ensuring that appropriate systems and assessment procedures are in place for the identification, reporting and control of all material risks; and
  • Ensuring that regular reports are presented to the Board and/or Risk and Compliance Committee on performance in relation to identification and management of risks.

The Group Treasurer is responsible for:

  • Preparing and/or annual updating a formal ‘Business Risk Assessment’ for consideration by the Risk and Compliance Committee;
  • Demonstrating through a program of internal audit and review that systems used to identify and control risk remain effective and are complied with; and
  • Providing an effective system for sign-off at six-monthly intervals from senior management with specific delegated responsibilities under this policy.

The Chief Financial Officer is responsible for:

  • The maintenance of an insurance program that covers all economically insurable risks; and
  • Managing the production of the Group financial reports and the external audit/reviews of those reports in accordance with the Corporations Act 2001 and other relevant legislation.

The Company Secretary is responsible for:

  • Disclosure of the Company’s risk profile, or any material change to it, to its shareholders.

Senior Management is accountable for:

  • The development, implementation, maintenance and review of appropriate systems and procedures for the identification, reporting and management of all material risks within their area of responsibility; and
  • Ensuring that the systems of risk management and internal compliance and control within their area of responsibility are sound, and operate effectively in all material respects.

All other employees are responsible for:

  • Taking all reasonable and practicable steps to ensure their responsibilities under this policy and the related systems and procedures are adhered to; and
  • Contributing to the continued improvement of the Company’s risk management capabilities by reporting through management any incidents that may result in unacceptable levels of risk or non-compliance within established procedures for measuring and reporting risks.

Financial reports

When the Company’s annual financial statements are being considered by the Audit Committee and the Board, the Chief Executive Officer and Chief Financial Officer are required to advise the Board in writing that:

  • The financial reports are founded on a sound system of risk management and internal compliance and control, which implements the policies adopted by the Board; and
  • The Company’s risk management and internal compliance and control system, which underpins the integrity of the Company’s financial reporting, is operating effectively in all material respects.

 

Application

Responsibility for the application of this policy rests with the Chief Financial Officer.

 

Policy review 

This policy is to be reviewed at least annually.  Any amendments are to be approved by the Board.

Reviewed: February 2015