Strategic report Governance Financial statements Other information RISK MANAGEMENT AND THE PRINCIPAL RISKS AND UNCERTAINTIES EVALUATING AND MANAGING RISKS CONTINUED The risk appetite statements combine qualitative Risk reporting format is a CRO Report covering trends, the • Operations Oversight team – provides risk statements and quantitative measures, or Risk is formally reported to several Committees Principal Risk profile, risk appetite, material risk and control support to Operations, creates thresholds expressed relative to metrics such by both the First and Second Lines of Defence. events and emerging risks. MI for the Operations Management Team and as operational performance, capital and liquidity. The First Line of Defence report to operational The First Line of Defence owns and is responsible manages the Operations process framework; The Group’s risk appetite and its components committees, including the Legal Entity for managing risk. There are also teams with areas • A dedicated IT Security team, which manages, are reviewed on at least an annual basis. Management Committees and the Executive of specific focus to support the maintenance of a tests and controls the cyber control The Board has overall responsibility for determining Committee. Reporting is driven by Risk exposure, strong control framework. Key examples of first environment, and the nature and extent of the acceptable levels of Risk Events, remediation activities and material line control functions include: A Product Governance team – provides or potentially material changes to risk exposures. • risk it is willing to accept in the course of achieving • CASS Oversight team – provides guidance oversight of the design, target markets and business objectives and strategy, achieving The Second Line of Defence provides risk and to operational teams on CASS and provides management of our core client propositions. positive client outcomes and ensuring that risks control reporting to plc committees, Legal Entity oversight of the CASS control environment; are managed effectively across the Group. Boards and Executive committees. The standard Viability statement The Board has considered the principal risks, the three-year period to June 2024 and confirm that sustained low interest rates would have landscape that affect our business typically take in arriving at the viability statement below that they have a reasonable expectation that on revenue potential. There was a range of place. The Board has informally considered the The principal risks and uncertainties faced by the Group will continue to operate and meet testing results over three potential future viability of the busines beyond the assessments the Group are detailed below. The principal risks its liabilities up to this date. The Directors’ outcomes, each of which looked at a different period and believe that the requirement for are categorised into strategic, operational, assessment has been made with reference pinch point such as interest rates, market levels clients, current and future, to have access to a financial and investment in accordance with to the Group’s current position and strategy, and stockbroking volumes. The worst outcome secure and efficient savings and investment our risk management framework. the Board’s risk appetite, the Group’s financial saw a 39% fall in the Group’s profit before tax platform will continue to increase. Management and the Board regularly discuss forecasts and the Group’s principal risks over the three-year period to June 2024. The strategic forecast is approved annually by emerging risks. Topics discussed during the and uncertainties. The Directors conclude that their expectation the Board and regularly updated as appropriate. period included communications from the The Directors’ assessment has also been made of the Group’s viability does not change as a It considers the Group’s profitability, cash flows, regulator, potential litigation, third party after careful consideration of the impact that result of this. dividend payments, capital requirements and services and solutions, operational resiliency, the COVID-19 pandemic has had, and continues The Board considers that a time horizon of other key variables such as exposure to principal cyber crime and the COVID-19 pandemic. to have, on the UK and global economy. It also three years is an appropriate period over which risks. It is also subjected to stress tests and Assessment process for pays attention to UK and global economic to assess its viability and prospects, and to plan scenario analysis, such as fluctuations in the viability statement forecasts which mostly anticipate a return to the execution of its strategy. This assessment markets, increased competition and disruption In accordance with provision 31 of the UK normal by 2023. Planning and scenario testing period is consistent with the Group’s current to business, to ensure the business has Corporate Governance Code, the Directors has examined the Company’s resilience to strategic forecast and ICAAP and it also sufficient flexibility to withstand these impacts have assessed the viability of the Group over worst case scenarios not only resulting from matches the timescale over which most by making adjustments to its plans within the the impact of the pandemic but also the impact changes to major regulations and the external normal course of business. 52 Hargreaves Lansdown Report and Financial Statements 2021