• Production and maintenance of the corporate risk map requires that each risk officer (ICFR) regularly updates
the information on each identified global risk needed for management and control;
• New events are identified, and
• Action plans are rearranged as necessary.
The Internal Audit Department evaluates the controls in place and quantifies residual risk.
Adequate definition of the scope of consolidation, allowing for the possible existence of complex corporate structures,
special purpose vehicles, holding companies, etc.
As part of the process of identifying and assessing risks in financial reporting, the Group’s Finance Department is
responsible for identifying and/or modifying the scope of consolidation and assesses the following:
a) the significant influence, if applicable, the Company, individually or in conjunction with the rest of the BME Group
companies, has over the company in question;
b) the percentage of the effective stake held by the BME Group in the company in question;
c) the activity and corporate purpose; and,
d) the existence of a “decision-making unit” in accordance with applicable legislation.
Therefore, in accordance with article 7 of the Board of Directors’ Regulations, with regard to the management guide-
lines and establishing the basis for the corporate organisation of senior management, the Board is responsible for:
“Approving the following operations: setting up and dissolving companies, acquiring stakes in existing companies, and any
merger, takeover, spin-off or concentration operations that the Company is interested in, provided that these are of signif-
icance for the Company in terms of their size or nature. In any event, the Board must submit to the General Shareholders’
Meeting for approval or ratification any acquisitions of stakes in companies whose corporate purpose is totally unrelated
to that of the Company or Group companies if and when the size of the investment represents over 20% of the Company’s
consolidated net worth.”
During 2012 no complex corporate structures or special purpose vehicles were identified.
The process addresses other types of risk (operational, technological, financial, legal, reputational, environmental, etc.)
insofar as they may affect the financial statements.
The risk identification process takes into consideration both business and support processes, and the intervening
applications in the preparation of financial information. For this purpose, the BME Group has a Structure of corporate
risks which includes the following risk types:
• Operational Risk.
• Market risk.
• Reputational risk.
• Risk of fraud.
• Legal risk.
• IT risk.
• Credit or counterparty risk.
• Inherent risk in the securities settlement system.
The BME Group prioritises each of the identified risks, weighting them according to the probability of occurrence (low,
moderate, significant and very high) and the impact on the Group should a detected risk turn into a real event (low,
moderate, significant and critical).
Finally, which of the company’s governing bodies is responsible for overseeing the process.
The Board of Directors shall“supervise the efficiency of the Company’s internal control and risk management systems”.
In order to carry out this function, the Board has an Audit Committee and to this end
“(...) the internal control and risk
management systems shall be reviewed by the Committee at least once a year, to ensure that the main risks are adequately
identified, managed and reported (...)”.
Lastly, according to the Regulations for the BME Group Internal Audit approved on 29 February 2012, one of the
Department’s missions is to:
“(...) assist the Audit Committee in the effective monitoring of the Internal Control and Risk
Management System, by exercising an independent function in line with the regulations and professional standards of
quality, which help good Corporate Governance and reduce to accepted levels the possible impact of the risks in the attain-
ment of the Company’s objectives. (…)”.
Appendix to the Annual Corporate Governance Report
In compliance with the Sustainable Economy Law
Report 2012
1...,204,205,206,207,208,209,210,211,212,213 215,216,217,218,219,220,221,222