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| Corporate governance | |||
| Ever since mmO2 became an independent company, we have made corporate responsibility fundamental to the culture of the Company and an essential part of how we operate as a business.
One important way in which this is achieved is to create an operating environment that demonstrates good corporate governance practice; another is to manage our approach to corporate responsibility as part of a well-developed and rigorous strategy for internal control and risk management. Good corporate governance is among our highest priorities. We aim to be at the forefront of best practice. Companies and their stakeholders increasingly see managing risk as a crucial part of operating successfully, in the widest sense. Risk management is about identifying, measuring and controlling future events that could threaten the Company's assets, its revenues, brand, reputation and value. It aims to create value, on the one hand, by having a system in place to properly assess and take advantage of potential opportunities. It also seeks to protect value by ensuring that risks that could damage the Company are identified and mitigated. The social disclosure guidelines of the Association of British Insurers (ABI) and the Turnbull Internal Control Guidance on the Combined Code make specific demands of companies about how they manage risk. We fully support these guidelines and our procedures in this area aim to comply with, or exceed, their requirements. Our detailed response to the ABI Guidelines can be found in this section of this report or in the 2003 mmO2 Annual Report and Financial Statements. |
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| Managing risk and the role of Directors | |||
| Our own risk management procedures are designed to be thorough and expertly managed. For example, we specifically assess value at risk and articulate our appetite for specific risks. Responsibility for all risk issues rests with designated Directors who are given the task of monitoring particular risks and devising and implementing remedies, where necessary.
Directors are encouraged to take account of social, environmental and ethical issues as part of the risk management process, building on existing policies that deal with issues such as corporate governance, health, safety and the environment. We have drawn up risk registers for each of the operating companies and these form the basis of a consolidated Group risk register. Our risk management process is under continuous review as we seek to improve further the identification of corporate responsibility risks at all levels of the business. Risk issues are reviewed by executive management every month and by the Board every six months. Our internal audit team also promotes effective risk management in each of the operating businesses. The internal audit team reports to the Audit Committee of the Board. All Directors and those specifically charged with managing risks are remunerated on the basis of their success in meeting set targets. The Board which currently comprises the Chairman, the Chief Executive Officer, the Chief Finance Officer, three further Executive Directors and seven independent Non-executive Directors, is regularly briefed on a range of social, environmental and ethical issues and potential risks facing the Company. These issues include community investment, human resources, business ethics, health and safety and environmental protection. In addition, during the year our Board attended a two-day strategy event that included corporate responsibility issues. A number of recent Board appointees chose to take part in a training seminar, which included the discussion of social, environmental and ethical issues. Along with training on corporate governance issues, all Directors have received information on the requirements of the ABI's social disclosure guidelines. These deal with the identification and assessment of social, environmental and ethical risks. At six monthly review meetings by the Board, Directors receive reports on all major operational risks. The integral nature of corporate responsibility in the risk management process is also highlighted to Directors. The management of risk takes place throughout the operations of the Company. Responsibility issues affect every part of the business and a number of employees have explicit corporate responsibility objectives to meet. Our fast track risk management process allows us to address risks swiftly and effectively. |
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| Business Principles | |||
| Enhancing the good name and reputation of the Company is one of the most important jobs that anyone working for mmO2 has to do.
Our own Business Principles, a copy of which we aim to make available to every employee in mmO2, sets out the standard of behaviour we demand of ourselves in our dealings with each other, with partners and suppliers, with customers and with all external agencies. A revised version of our Business Principles was approved by our Board in December 2002. We continue to promote these Principles throughout the Company to make sure that our strict standards on issues like the acceptance of gifts, the award of contracts to suppliers, confidentiality, harassment, health and safety, are widely understood and acted upon. In 2003/04 we intend to introduce further measures - including an online training programme and measurement procedures - to ensure our Business Principles are being adopted and adhered to across the Company. Managers are responsible for making employees aware of the Principles and reporting on compliance. The Business Principles document enables employees to use a confidential help and notification system to report any behaviour that they are concerned about. They are assured that their concerns will be taken seriously and that their complaints will be dealt with privately and without fear of retribution. We are confident that we will be able to meet the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) requirements for Code updates and the logging of calls to the confidential help line. Approaches to corporate governance are evolving. While we meet all the demands of the Combined Code, we are also actively involved in the debate about new corporate governance practice, most notably the Higgs review in the UK and Sarbanes-Oxley in the US. |
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