2014 Registration Document and Annual Financial Report - page 121

Report of the Chairman of the Board of Directors Identifying and analyzing risks
The Group identifies and analyzes the key risks that, if they occurred,
would affect its ability to fulfill its objectives. It takes the appropriate
measures to limit the probability of these risks occurring and the
consequences if they do.
As part of these measures, the Group has set up a Central Risk
Management and Coordination Committee tasked with:
monitoring the rollout of the yearly risk map;
helping priority risk owners in their risk management processes;
tracking the implementation of risk prevention plans put in place
by these risk owners;
ensuring that the risk management measures taken by business
units and corporate functions are aligned.
The Committee’s members are:
the Deputy Chief Executive Officer;
the CEO of HotelServices, France;
the CEO of HotelServices, United-Kingdom,Irland, Benelux,
Switzerland, Russia and CSI;
the Chief Human Resources Officer;
the Chief Safety and Security Officer;
the Senior Vice-President, Internal Audit;
the Senior Vice-President, Risk Management and Insurance.
This Committee – which is an expanded version of the former Risk
Coordination Committee – meet once every three months.
Identifying risks
The Group is exposed to a number of risks in the normal course
of business.
These risks, together with the related control procedures, are
described in the «Risk Factors» section of this Registration Document.
They mainly correspond to operational risks, environmental risks,
legal risks (including litigation and arbitration risks), and financial
risks.The «Risk Factors» section also includes a description of the
Group’s insurance strategy.
Risk mapping
Internal control risk maps are prepared based on the Internal Audit
assignments and above-mentioned self-assessments.These maps,
which highlight issues that require priority action, are included in
the relevant Internal Audit reports and are periodically presented
in summary form to the Internal Control Committee and the Audit
and Risks Committee.
A global risk map covering all internal and external risk factors
has also been developed in order to obtain data in a standard
form concerning the Group’s levels of risk exposure as perceived
by Executive Management and by each unit, and to prepare the
appropriate action plans when required. Each risk is assessed based
on the level of the potential loss it could cause, the probability of
it occurring and how efficiently it is managed.
The risk management and insurance Department helps the operating
divisions to put in place corrective measures in order to mitigate
the main identified risks.
As is the case every year, the results of the risk management and
insurance Department’s work were presented to the Audit and
Risks Committee in December. Control activities
To improve control of identified risks, the Group has set up control
procedures that comply with its standards and cover both operating
and financial information processes.
Authorization process for expansion capital
expenditure and disposals
A procedure has been set up for the prior authorization of capital
expenditure projects, to ensure that they comply with Group strategy
and return-on-investment-criteria. The procedure requires formal
authorizations to be obtained from the appropriate line and staff
managers, in a standard format. A similar authorization procedure
has been established for disposals.
As part of this process, the Group has a Business Development
Committee, which is tasked with analyzing all projects representing
over €150 000 concerning either directly owned hotels or hotels
operated under franchise or management agreements. All projects for
directly-owned hotels and hotels operated under management and
franchise agreements that represent over €5million are subsequently
presented for final approval to the Group’s Executive Committee.
Likewise, the Executive Committee’s approval is required for all
projects in the luxury and high-end segments.
The Business Development Committee comprises the Chief Financial
Officer; the COO of HotelInvest (for directly-owned projects); the
HotelServices CEO of the region concerned (for management and
franchise projects); the SeniorVice-President, Business Development
and the Senior Vice-President, Strategy.
The Business Development Committee meets approximately once
a month.
Preparing and controlling the consolidated
financial statements
The consolidated financial statements are prepared by Group Finance
based on information reported by the subsidiaries’ Chief Executive
Officers and Finance Directors. The format of the consolidation
packages is determined by the Group.
The subsidiaries are responsible for the information contained
in their consolidation packages and are required to make formal
representations to Group Finance about the fairness of reporting data
and its conformity with Group accounting standards and policies.
The Consolidation Department carries out systematic controls of
the consolidation packages submitted by the subsidiaries. A detailed
schedule for reviewing the packages has been prepared and sent
to the employees concerned.
Registration Document 2014
1...,111,112,113,114,115,116,117,118,119,120 122,123,124,125,126,127,128,129,130,131,...332
Powered by FlippingBook