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A regular assessment of the risks inherent to the GBL group and the effectiveness of the internal control system

This section presents a summary table that categorises the main risks related to GBL’s activities and the various factors and measures mitigating their potential negative impact.

The risk mapping and a schematic representation of the risk identification, assessment and control process can be found here : Risk mapping and schematic representation of the risk identification, assessment and control process.
The section ends with a detailed description of the internal control and risk management system’s formalisation based on the COSO model.

 

Risk management and internal control

Main risks Risk factors Mitigants
Exogenous

Risks associated with shifts in external factors such as economic, political or legislative change
  • Changes in financial markets, notably with regards
    to the volatility of share price and interest and foreign
    exchange rates
  • Changes in macroeconomic variables (growth rates,
    monetary policy, inflation, commodity prices, etc.)
  • Regulatory or budgetary policy changes involving , for
    example, tax reform or new legal obligations
  • Specific developments affecting certain geographic
    areas (Eurozone, emerging countries, etc.)
  • Geographic and sector diversification of the portfolio
    with differentiated cyclical exposure
  • Ongoing legislative monitoring
  • Systematic monitoring and analysis of macroeconomic
    scenarii, markets and investment thesis
Strategy

Risks resulting from the definition, implementation and continuation of the group’s guidelines and strategic developments
  • Differing visions or understanding of the assessment of strategic priorities and inherent risks
  • Validity of the parameters underlying investment thesis
  • Geographic or sector concentration of investments
  • Formal decision-making process involving all
    governance bodies and the management
  • Ongoing monitoring of key performance indicators and
    regular updates of assumptions and forecasts
  • Periodic portfolio review at different hierarchical levels
  • Portfolio diversification
Cash and cash equivalents, financial instruments and financing

Risks associated with the management of cash and cash equivalents, financial instruments and financing
  • Access to liquidity
  • Debt leverage and maturity profile
  • Quality of counterparties
  • Relevance of forecasts or expectations
  • Interest rate exposure
  • Developments in financial markets
  • Volatility of derivative instruments
  • Rigorous and systematic analysis of considered transactions
  • Definition of trading limits
  • Diversification of investment types and counterparties
  • Strict counterparty selection process
  • Monitoring of the liquidity profile and limitation of net
    indebtedness
  • Formal delegations of authority with the aim to achieve appropriate segregation of duties
  • Systematic reconciliation of cash data and the accounting
Operations

Risks resulting from inadequacies or failures in internal procedures, staff management or systems in place.
Risk of non-compliance with quality standards, contractual and legal provisions and ethical norms
  • Complexity of the regulatory environment
  • Adequacy of systems and procedures
  • Exposure to fraud and litigation
  • Retention and development of employees’ skills
  • Internal procedures and control activities regularly
    reviewed
  • Implementation of delegations of authority to ensure an
    appropriate segregation of duties
  • Maintenance of and investments in IT systems
  • Hiring, retention and training of qualified staff
  • Internal Code of Conduct and Corporate Governance
    Charter

 

Specific risks related to the participations

GBL indirectly faces specific risks related to the participations, which are identified and addressed by the companies themselves within the framework of their own internal control. The analysis conducted by these companies in terms of risk identification and
internal control is described in the reference documents available on their website.

 

Imerys

> Dedicated section on Imerys website

SGS

> Dedicated section on SGS website

LafargeHolcim

> Dedicated section on LafargeHolcim website

Pernod Ricard

> Dedicated section on Pernod Ricard website

adidas

> Dedicated section on adidas website

Umicore

> Dedicated section on Umicore website

Total

> Dedicated section on Total website

Burberry

> Dedicated section on Burberry website

Ontex

> Dedicated section on Ontex website

GEA

> Dedicated section on GEA website

Parques Reunidos

> Dedicated section on Parques Reunidos website