52 John Lewis Partnership plc Annual Report and Accounts 2016 Managing our Partnership risks


We define risk as ‘anything that can adversely affect our ability to meet the Partnership’s objectives and comply with regulatory standards.’


Our approach to risk


Risk is inherent in our operations and the decisions we make in pursuit of our Partnership Aims. The Partnership Board is responsible for the nature and extent of the principal risks that we are willing to take. It has undertaken a robust assessment of the principal risks to the Partnership in relation to achieving our strategy and our future performance, including solvency and liquidity (see page 99). The Partnership Board is also responsible for ensuring that risk is effectively managed through our governance structure (see page 53) in line with its risk appetite. All Partners should strive to be aware of risks in their area of responsibility and manage those risks intelligently in their day-to-day activities.


Governance


The Partnership Board has ultimate responsibility for the Partnership’s system of internal control and risk management and reviewing its effectiveness; and seeks to comply with the UK Corporate Governance Code (2014).


The Board has monitored the Partnership’s risk management and internal control systems with the support of the Chairman’s Committee and the Audit and Risk Committee on a quarterly basis. It has developed a clear risk appetite within which the business should operate, and has monitored the Partnership’s performance in mitigating our principal risks on a quarterly basis. Further details of the principal risks, controls, progress in the year and further actions are included on pages 55 to 57.


The Audit and Risk Committee reviews the effectiveness of the risk management process and systems of internal control, as well as challenging risks and mitigation plans. See page 86 for further details. This year we established Corporate Responsibility Committee as a committee of the Board to reflect our increasing focus on CSR policy and objectives.


Each Division is responsible for identifying, evaluating, managing, measuring and monitoring the risks and their controls as part of regular operations. Divisional Risk Committees met at least quarterly and assessed risks and the key controls against these risks, with support from the Head of Internal Audit and Risk and Divisional Risk Managers. The outcomes from the Divisional Risk Committees are considered at the Audit and Risk Committee. Management self-certify on an annual basis that they have followed the risk management process at year-end.


The Head of Internal Audit and Risk reports functionally to the Chair of the Partnership Audit and Risk Committee, and operationally to the Group Finance Director. Internal Audit reviews the design and effectiveness of internal controls using a risk-based audit plan aligned to Divisional strategies.


Our governance structure encourages the effective flow of risk and control insights throughout the Partnership. For more detail, go to the Audit and Risk Committee report on page 82.


“ Effective risk management will enable us to achieve our Partnership strategy efficiently and will help build Partners’ trust.”


Patrick Lewis Group Finance Director


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