1. Home
  2. /
  3. Governance and Risk management

Governance and Risk management

The Board is ultimately responsible for ensuring the integrated and holistic implementation of the principles set out by King IV.

Governance and Risk

Ethical leadership

The leadership of L2D is fully committed to the application of and compliance to the highest ethical standards. The Board firmly believes in leading by example and ensuring that the tone is set at the most senior level of the leadership structure. The code of ethics is strictly adhered to in the development and implementation of all business and growth strategies. All decisions are made with due consideration to the code of ethics that is set out in the employee policies. Every L2D employee is required to familiarise themselves with and adhere to the code of ethical conduct to maintain the highest levels of integrity, honesty and transparency. In order to confirm that all employees understand the stipulations of the code of ethical conduct, management has drafted and implemented policies that address ethical matters.

This includes a code of professional conduct and HR policies. L2D has a zero-tolerance policy on any issues relating to unethical conduct. The company does not, at any level, condone or tolerate any form of fraud, corruption, unlawfulness or other conduct that is irregular. The protection of confidential information and employee data is of the utmost priority for L2D as we understand the severe risks associated with data leaks.

L2D will not, under any circumstance, engage with or condone any transactions or business dealings with third parties – including suppliers, customers and other stakeholders – that are deemed to have materially breached any governance or legislative standards that would have been applicable to these stakeholders.

Application of King IV

The Board is ultimately responsible for ensuring the integrated and holistic implementation of the principles set out by King IV.

The Board is satisfied that it has and continues to apply all the applicable governance principles and is compliant with the JSE Listings Requirements. The Board is determined to continually improve its application of all the King Code of Governance Principles in the best interest of L2D and its various stakeholders. Where the Board has identified practices that are not in the best interest of L2D and its stakeholders, it explains the alternative approach to that application of governance.

Risk Management
The Board carries the ultimate responsibility for the governance of risk. Although the Board has delegated the governance of risks to the Audit and Risk Committee, it has not delegated the ultimate responsibility on the governance of risk. The Board, with the assistance of the Audit and Risk Committee, has set out an integrated risk assessment and combined assurance plan that provides guidance on the management of risk throughout the decision-making and business operations process.

The Board and executive management have compiled a detailed analysis of the operations of L2D, noting the most significant risks. The Board is in the process of setting a level of risk tolerance for L2D in pursuit of its business goals in line with its vision to create sustainable value and growth. The effect of risks is evaluated and considered through financial performance, social and environmental impacts.

Executive management is responsible for the implementation, monitoring and reporting of an effective risk management plan. The operational risk register of L2D is reviewed monthly, with risks analysed in detail, and updated by the executive management committee. The members include executive and senior management from the operational and finance function of L2D.

The operational risk register is presented to the Audit and Risk Committee quarterly for discussion and approval before being presented to the Board for final approval. During the quarterly meetings, all material non-compliance is evaluated, and an operational plan of action established to address non-compliance. The control environment implemented to mitigate the residual risks to acceptable levels is evaluated on a continuous basis to ensure relevance and effectiveness in mitigating identified operational risks.

All identified risks are assigned to a risk owner that is responsible for the daily monitoring and ensuring that the risk is effectively addressed. All changes within the risk environment are recorded in the combined assurance plan. The identification, evaluation and management of risk is an ongoing process and is updated regularly at Board and management level.

The Board continues to drive efforts to educate stakeholders on how risks affect operational and strategic decisions and ensure that risks are being managed appropriately.

For further information on Governance and Risk management at Liberty Two Degrees please refer to the 2017 Integrated Report