Page 19 - Stellar IAR2015

RISK MANAGEMENTThe Board, supported by the Audit and Risk Committee, is tasked with the continuous monitoring of nancial and reputational risks facing the Group. Given the size of the strategic stakes acquired by the Group in its investees, Stellar Capital is represented on investee boards and is able to in uence and monitor decision-making in this regard, with quarterly feedback to the Group Board.The table below outlines the key risks and mitigating responses in relation to the Group:ContextContext descriptionRiskMitigating responsesNAVNAV growth drives the Group’s performance- Investee underperformance- Negative micro and macro-economic climate- Financial risk management policies as detailed in note 31 of the annual nancial statements- Representation on investee Boards, exco’s and sub-committees with quarterly feedback to the Board of Stellar Capital- Diversi cation of investments across multiple industriesHuman ResourcesThe Group’s access to knowledgeable, experienced management teams is critical to its success- Loss of key management personnel at Group or investee level- Equity incentivisation of key Group and investee management- Continuous succession monitoring by the Nominations CommitteeLiquidityAccess to su cient cash ow from investments is critical to servicing preference share funding liabilities- Insu cient cash ow generation from investments- Monthly exco meetings to monitor cash ow generation from investees- Deployment of capital to loan investments to provide liquidity to service funding obligations- Retention of cash ow bu er equal to one semi-annual preference share funding obligation dividend at all timesLegislationCompliance with legislation relevantto the sectors within which the Group and its investees operate is critical to the viability of the business- Non-compliance with laws and regulations and levying of penalties- Appointment of key advisors to advise directors on matters of complianceInformation technologyE cient utilisation of technology to report investee performance and operations of the Group- Loss of critical Group and investee information- Interruption of operations- Monitoring of technology function by investee boards on which Stellar Capital enjoys representation- Appropriate server backups and o site disaster recovery capabilitySTELLAR CAPITAL PARTNERS | 15