Doing business involves taking risk and therefore risk management is an essential element of Fugro’s culture, corporate governance, strategy development, and operational and financial management.
Fugro is willing to take risks, as it is sufficiently equipped to manage them. Fugro’s risk management is aimed at supporting long-term sustainable value creation. It is designed to provide reasonable assurance that objectives are met by integrating management control into daily operations, ensuring compliance with legal requirements and safeguarding the integrity of the company’s financial reporting and related disclosures.
||For strategic risks, acceptable risk levels vary depending on the subject at hand, where expected rewards have to justify the risk. Generally the appetite is between above average to high.
||Operational risks are handled with a moderate risk appetite. However, all risks related to QHSSE and cyber security are subject to low risk appetite.
||Financial risk appetite is low, with the intent to limit financial risks and maintain long-term solvency and stay well within bank covenants.
|Currency exchange rate
||Compliance is subject to a low risk appetite as Fugro strives for the highest level of compliance with legal and regulatory requirements and strives to not infringe on third party IP or properly license.
Risk management framework
The first level of the control environment consists of Fugro’s employees who perform the day to day activities in the business operations, and their management. They undertake these activities in accordance with the applicable authorisation matrix, which is updated regularly by the Board of Management. They have the obligation to obtain an appropriate level of understanding regarding their roles and responsibilities. Every employee is expected to comply with internal procedures and applicable laws and regulations.
The second level consists of the company’s support functions such as QHSSE, financial control, procurement, IT, tax, human resources, insurance, treasury and legal. The third and final level consists of the independent internal audit department which reports to the line management, the Board of Management and the audit committee on the structure, existence and effect of the risk management and internal control systems.
The Board of Management holds ultimate responsibility for risk management and determines the risk appetite for the company. Internal audit supports the Board of Management in monitoring implementation of the framework. On an annual basis the Board of Management performs a comprehensive assessment to determine the top risks. The identified risks are assigned to owners within the Board of Management, who have ultimate responsibility to manage these.
The Board of Management reports to the audit committee on the risk management processes. The audit committee and the Board of Management receive independent information on risk management activities from the internal audit department. The audit committee reports their observations and findings to the Supervisory Board.
This structured risk management process allows Fugro to take risks in a controlled manner. Constant monitoring of markets and the operating and financial results is intrinsic to its way of working due to the generally short-term nature of its assignments. Clarity and transparency are essential for assessing and evaluating risks. These are fundamental characteristics of the company’s culture.