Philips 2009 Annual Report Download - page 103

6Risk management
6.1 Introduction
The following sections present an overview of Philips’
approach to risk management and business control and a
description of the nature and the extent of its exposure to
risks. Philips risk management focuses on the following
risk categories: Strategic, Operational, Compliance and
Financial risks. These are further described in the section
‘Risk categories and factors’ of this Annual Report. The
risk overview highlights the main risks known to Philips,
which could hinder it in achieving its strategic and financial
business objectives. The risk overview may, however, not
include all the risks that may ultimately affect Philips. Some
risks not yet known to Philips, or currently believed not to
be material, could ultimately have a major impact on
Philips’ businesses, objectives, revenues, income, assets,
liquidity or capital resources.
All oral and written forward-looking statements made on
or after the date of this Annual Report and attributable to
Philips are expressly qualified in their entirety by the
factors described in the cautionary statement included in
chapter 17, Forward-looking statements and other
information, of this Annual Report and the risk factors
described in the section below entitled ‘Risk categories
and factors’.
6.2 Our approach to
risk management
and business
control
Risk management forms an integral part of the business
planning and review cycle. The company’s risk and control
policy is designed to provide reasonable assurance that
objectives are met by integrating management control
into the daily operations, by ensuring compliance with
legal requirements and by safeguarding the integrity of the
company’s financial reporting and its related disclosures. It
makes management responsible for identifying the critical
business risks and for the implementation of fit-for-
purpose risk responses. Philips’ risk management
approach is embedded in the areas of corporate
governance, Philips Business Control Framework and
Philips General Business Principles.
Corporate governance
Corporate governance is the system by which a company
is directed and controlled. Philips believes that good
corporate governance is a critical factor in achieving
business success. Good corporate governance derives
from, amongst other things, solid internal controls and
high ethical standards. Risk management is a well-
established part of Philips’ corporate governance
structure.
The quality of Philips’ systems of business controls and the
findings of internal and external audits are reported to and
discussed in the Audit Committee of the Supervisory
Board. Internal auditors monitor the quality of the
business controls through risk-based operational audits,
inspections of financial reporting controls and compliance
audits. Audit committees at corporate level (Finance and
IT/Supply) and sector level (Healthcare, Lighting,
Consumer Lifestyle, Group Management & Services) meet
quarterly to address weaknesses in the business control
infrastructure as reported by internal and external
auditors or revealed by self-assessment of management,
6 Risk management 6 - 6.2
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