Risk management enables us to identify, measure and manage events that could threaten our business

Risk management keeps us focused on achieving our objectives. It also helps us identify opportunities to strengthen the business and respond to market trends and public opinion in ways that improve our reputation and sustainability.

Through risk-based management we can:

• anticipate trends that may threaten our assets, revenue, brand, reputation or shareholder value;
• assess our appetite for new and existing risks and develop strategies to mitigate them;
• protect our resources and revenue;
• develop a culture of managing risk among our employees; and 
• turn risks into valuable business opportunities.

We support the disclosure guidelines on social responsibility set out by the Association of British Insurers (ABI). These help us to manage our social, ethical and environmental risks. During the year the Telefónica Europe Board was briefed on a range of issues, notably climate change,  environmental management, carbon emissions, child protection,  health,  privacy and data protection.
 
Board members are responsible for managing the risks across their local O2 businesses and during 2007 they reported every six months to the Audit Committee. Their pay and reward is linked to the achievement of key performance targets such as customer satisfaction and employee engagement.

During the year we began to fold Telefónica’s reputation and risk management model 'RepTrak' into our operations. This will be ongoing during 2008.