Process of risk management

Gamma Holding attaches great importance to risk control. To increase risk awareness within the group, to gain a better understanding of the existing risks and to control identified risks more effectively, Gamma Holding has a structured system for risk management. This system is based on the generally accepted COSO framework and results in an extensive risk profile per business unit. In addition, rules and authorisations have been laid down in several control documents, including a corporate, accounting, treasury and insurance manual.

Process of risk management

The management of the business units is responsible for identifying and controlling business risks and is assisted in that regard by Gamma Holding. The management of each business unit reports to the Executive Board on the risks identified, their likelihood and the measures taken to control these risks. These reports also outline the progress and effectiveness of the control measures taken. The Executive Board periodically consults with the business units regarding the effectiveness of the system for risk management and internal control. The Executive Board discusses the identified risks with the Supervisory Board.

Internally, account is rendered four times a year by means of a ‛Letter of Representation', in which the management of the business units is asked to confirm that risk management is duly carried out and that the figures provided and the application of the control procedures are reliable. Externally, account is rendered via the auditor, who each year assesses the key aspects of the structure and functioning of the accounting organisation and its internal control measures, insofar as that is relevant for the audit of both the company’s financial statements and the local statutory financial statements, and insofar as that ensues from additional assignments. A report is issued to local management, business unit management, the Executive Board and the Supervisory Board.

Due to the system of risk management that has been introduced and the way in which the process is conducted, an internal structure has been created that supports risk management within the company. However, the Executive Board realises that the risk management system can never offer an absolute guarantee that, on the one hand, the goals set by the company will be achieved, or, on the other hand, that material misstatements, losses, fraud or legal or regulatory transgressions will be avoided. The Executive Board is of the opinion that, with regard to the financial risks, the risk management and control systems provide a reasonable degree of certainty that the financial reporting does not contain any material misstatements, and that said systems functioned properly in 2009.