Risk management

Identifying and mitigating risk

Risk is inbuilt in our activities and it is essential we manage it well.

Risk management is a way to identify, measure and manage uncertain future events that could threaten our assets, revenue, brand, reputation or shareholder value. It also helps us identify opportunities to strengthen our business and to anticipate and respond to future trends and public opinion.

Senior management regularly considers current and future business risks, and this is a critical part of our risk management process.

We support the disclosure guidelines on social responsibility that the Association of British Insurers (ABI) set out. These guidelines help us ensure we are effectively managing the social, ethical and environmental risks that may affect our business.

During the year the O2 Board was briefed on a range of issues, including environment, health and safety, wellbeing and ethical risk. These issues are monitored through the system of risk management and corporate governance. Executive Directors’ pay is based on several indicators, including key performance targets on customer satisfaction and employee engagement.

Effective risk management enables us to:

• Understand the state of the business and future trends.
• Assess our appetite for new and existing risks and develop strategies to mitigate them.
• Protect our resources and revenue sources.
• Develop a culture of risk management among our employees.
• Assure our compliance with our risk management policy.
• Turn risks into new value-adding business opportunities for the Company.

Executive Directors are responsible for managing the risks across their respective businesses. During the year, they reported every six months to the O2 Audit Committee, which is ultimately responsible to the Board.

Key social, environmental and ethical issues are championed by individual O2 Executive Committee members or senior managers, as listed in the table below

Each champion reports regularly to the Executive Committee and the O2 Board. This enables our Board to consider social, environmental and ethical matters regularly and to make this an intrinsic part of how we run our business.

Each of our operating businesses has its own dedicated risk manager, but risk management is also part of every manager’s job. Where appropriate, it is included in our appraisal process, which influences salary and bonus payments.

We also use our intranet to advise employees what to do if they have concerns about internal controls or significant risks.