Strategic report Governance Financial statements Other information CORPORATE GOVERNANCE REPORT CONTINUED Risk management and internal controls The Board delegates responsibility for monitoring those systems The Board is responsible for establishing procedures for risk to its Audit and Risk Committees, and each carries out an annual management and for monitoring the Group’s risk management review of their effectiveness on the Board’s behalf. Together, this framework and system of internal controls. The Board is also review covers all material controls, including financial, operational responsible for determining the nature and extent of the principal and compliance controls and risk management systems. Further risks the Group is willing to take in order to achieve its long-term details can be found on pages 85 to 86 of the Audit Committee strategic objectives. Supported by the Risk Committee, the Board report and page 123 of the Risk Committee report. The crossover carries out a robust assessment of the Group’s emerging and of membership between the Audit Committee and Risk principal risks when assessing the prospects of the Company over Committee assists in the exchange of relevant issues and the the longer term. The outcome of that assessment, along with a facilitation of associated discussions. description of the Group’s principal risks, the procedures in place Following review by its Committees, the Board is satisfied that to identify emerging risks, and an explanation of how these risks the Group’s risk management and internal control systems are are managed or mitigated can be found on pages 50 to 58 of the adequate and have continued to improve throughout the period Strategic Report. under review. The Board recognises that in order to support the The Group’s risk management and internal control framework is recent and continuing growth and increasing complexity of the designed to manage rather than eliminate risk and follows the Group, there is a need to invest in improving and strengthening the ‘three lines of defence’ model. Risk management and the Group’s risk culture and the risk management and internal control implementation of controls is the responsibility of the operational systems. Further information on the planned enhancements can teams which constitute the first line. Oversight and guidance is be found on page 123 of the Risk Committee report. provided by the Group’s Risk and Compliance functions which Remuneration constitute the second line, and third line independent assurance The Group’s remuneration policies and practices are designed is provided by the Group’s Internal Audit function. to support its strategic objectives and promote its long-term A description of the main features of the Group’s risk management sustainable success. A summary of how the Company has and internal control systems, which have been in place for the complied with the remuneration requirements set out in the Code, period under review and up to the date of this report, can be found along with details of the Remuneration Committee’s activities on pages 50 to 58 of the Strategic Report. during the period under review, the levels of Directors’ remuneration and the proposed new Directors’ Remuneration Policy, can be found on pages 92 to 97. 80 Hargreaves Lansdown Report and Financial Statements 2021