Governance code forces risk management action in corporate SA – Africa

Case Study: AngloGold Ashanti In 2009 the AngloGold Ashanti board decided to adopt a more systematic approach to risk management at a group level to move the discipline from an approach that was previously focused on compliance to one designed to support business strategy. The company says that the change was made in anticipation of two important codes under development at that time—the King Committee on Governance ‘Code of Governance Principles for South Africa 2009’ (King III) and the international ISO 31000 risk management standard. The group said that, as a first step, a change in the approach to risk management was ‘enabled’ through a restructure of its risk management function that positioned it within the business strategy team.hideThe team dedicated to this task designed a new risk management process that took into account three major objectives. These were the creation of a risk-aware culture within the company, a substantial improvement in the management of the risks that the company faces and an effort to use risk management to harness possible opportunities. The mining group said that a ‘live’ risk register or database that includes a risk tracking and reporting system accessible to all operations globally, as well as projects, exploration and regional and corporate functions was ‘core’ to its approach. “To support consistent application of a risk process across the company, the team created a common risk ‘language’ that is now in use. Risk assessment and evaluation processes are included in the system to ensure the validity of the risk information; ultimately equipping senior management to take key risks into account in the decision-making process,” explained the group. AngloGold said the system has ensured risk data has become accessible to all layers of the company and there is ‘good evidence’ that risk information is being adopted into business strategy. “I see the beginnings of a truly risk-aware culture within the company,” said Mr Robins. “We are starting to move away from managing risk in silos and are now managing risks continuously, using online tracking tools. Risk is starting to inform all our decisions in a more documented and formal manner,” he added. As an example of the application of the new system, group internal audit at AngloGold now uses the information gathered to conduct risk-based audits of management controls and has thus moved away from the old compliance-based approach. Accountability for the management of risk areas has also been strengthened by the appointment of ‘risk owners’ who are in charge of each of the company’s risk areas at regional, divisional and operational level. The group said that reports have also been designed and created to ‘properly inform’ each type of user including the board, which is accountable through its audit and corporate governance committee for risk management at group level. Business sustainability risks are tracked by the environment and community function amongst other discipline specialists. “Although risk ownership and the accountability to manage risk remains with line management, functional experts review data to ensure the validity of the process and the accuracy of the risks presented,” explained the group when the new system was unveiled in 2009.

Governance code forces risk management action in corporate SA – Africa

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