1. Membership
1.1 The Executive Risk Management and Monitoring Committee will consist of not less than two members, who will include Executive Directors. The Chief Executive will normally act as Chairman of the Committee.
2. Quorum
2.1 The quorum of the Executive Risk Management and Monitoring Committee will be two including at least one Executive Director.
3. Group Attitude to Risk and Duties
The Executive Risk Management and Monitoring Committee should carry out the duties below for the Company and the Group as a whole, as appropriate.
Group Attitude to Risk
3.1 Risk is inherent in the Group’s business activities. It is the Group’s approach that commercial risk can be taken, provided that:
a) the rewards are appropriate and achievable through legitimate commercial practice;
b) the risks and rewards have been identified and assessed; and
c) appropriate controls have been identified and are put in place.
3.2 Risk controls should be monitored by the Executive Risk Management and Monitoring Committee so that any risk with a high probability and/or a material impact can be:
a) avoided; or, if this not feasible;
b) minimised or mitigated; or
c) transferred to another party such as an insurer, customer or supplier.
Duties
3.3.1 Advise the Board or Audit Committee (as appropriate)of any emerging risks which may impact on its long-term strategic objectives.
The Executive Risk Management and Monitoring Committee should seek assurance on the risks the Group identifies as those to which the business may be exposed.
The risks will be specific to the Group’s circumstances but are likely to include many of the following:
• Threats to the business model or future performance
• Operational risk
• Transactional risk
• Capital
• Insolvency
• Market risk
• Liquidity
• Counterparty risk
• Conduct risk
• Material litigation
• Reputational risk
• Environmental, Social and Governance (ESG) issues
• Ethical codes
• IT operations, including cyber risk
• Health and safety
• Pandemic risk
• Business continuity plans
• Duties under the Companies Act 2006
Other risks specific to the Group’s sector and its operations need to be identified and may, for example, include:
• Regulatory and legal risks
• Investment risk
• Insurance risk
• Research and development
• Manufacturing and supply chains
• Major accident
3.3.2 Advise the Board and Audit Committee on the likelihood and the impact of principal risks materialising, and the management and mitigation of principal risks to reduce the likelihood of their incidence or their impact.
3.3.3 Ensure that the requirements of the AIM Rules for Companies are complied with by the Company in relation to risk management.
Narrative reporting
3.4 The Executive Risk Management and Monitoring Committee shall carry out the following duties to assist the Board and Audit Committee in fulfilling their reporting responsibilities in the annual report.:
3.4.1 Monitor and review the effectiveness of the Group’s risk management and internal control systems.
3.4.2 Review the Group’s procedures to manage or mitigate principal risks and to identify emerging risks, to assist in the assessment of principal and emerging risks.
3.4.3 Evaluate the company’s principal risks, to be taken into account when assessing the company’s prospects.
3.4.4 Review and recommend the statements to be included in the annual report concerning internal controls and risk management.
Internal controls and risk management systems
3.5 The Executive Risk Management and Monitoring Committee shall oversee and seek suitable assurance regarding:
3.5.1The risk exposures of the Group including risk to the company’s business model, and solvency and liquidity risks.
3.5.2 The adequacy and effectiveness of the Group’s processes and procedures to manage risk and the internal control framework, including the design, implementation and effectiveness of those systems.
3.5.3 The ability of the Group’s risk management and internal control systems to identify the risks facing the company and enable a robust assessment of principal risks.
4. Authority
4.1 The Executive Risk Management and Monitoring Committee will have access to all information (both external and internal) which it needs to make its decisions and recommendations.
5. Attendance at Meetings
5.2 The Company Secretary will act as secretary to the Executive Risk Management and Monitoring Committee.
6. Frequency of Meetings
6.1 The Chairman will call a meeting of the Executive Risk Management and Monitoring Committee whenever appropriate, but would normally meet quarterly and, in any case, not less than twice per year.
7. Notice of Meetings
7.1 Meetings of the Executive Risk Management and Monitoring Committee will be called by the Secretary of the Executive Risk Management and Monitoring Committee at the request of any of its members.
7.2 Unless otherwise agreed, notice of each meeting confirming the venue, time and date, together with an agenda of items to be discussed, will be forwarded to each member of the Executive Risk Monitoring and Management Committee and any other person required to attend prior to the meeting. Supporting papers will be sent to Executive Risk Management and Monitoring Committee members and to other attendees as appropriate, at the same time.
8. Minutes of Meetings
8.1 The Secretary of the Executive Risk Monitoring and Management Committee will minute the proceedings and resolutions of all meetings of the Executive Risk Management and Monitoring Committee, including recording the names of those present and in attendance.
9. Reporting Responsibilities
9.1 Having regard to the agreed split of responsibilities between the Board and the Audit Committee it is recognised that certain matters within the remit of the Board will require reporting to the Board and other matters within the remit of the Audit Committee will require reporting to the Audit Committee.
9.2 The minutes of the Executive Risk Management and Monitoring Committee will be circulated to all members of the Board or Audit Committee (as appropriate).
9.2 The Executive Risk Management and Monitoring Committee will report to the Board or Audit Committee (as appropriate) on its proceedings after each meeting on all matters within its duties and responsibilities.
9.3 The Executive Risk Management and Monitoring Committee will make whatever recommendations to the Board or Audit Committee (as appropriate) it deems appropriate on any area within its remit where action or improvement is needed.
In these Terms of Reference:
Group will mean the Company and its subsidiaries and subsidiary undertakings from time to time; and
Approved and
adopted by the Committee
on 8 February 2023
