10. Risk management and internal controls

10.1 Risk Management

The risks can be divided into 4 groups:

• Market: Market risks like fluctuations in demand, prices, increasing customer's requirements and growth strategies.
• Operations: Operational risks like biological risk, HSE and natural phenomenas.
• Financial: Financial risks like currency exposure, fluctuations in interest rates, profitability and funding.
• Compliance: Risk of non-compliance with laws and regulations like licence and fish health requirements.

From 2008 the board of directors is making an annual evaluation of the group risk assessment. All substantial risks and adherent internal controls are included in the assessment. Improvement plans to reduce residual risks are made when necessary.

10.2 Internal controls

Marine Farms applies the Coso-ERM framework (Committee of sponsoring organisations of the Treadway Commission - Enterprise Risk Management).

The three main objectives of the internal control system are:

• Effectiveness and efficiency of operations.
• Reliability of financial reporting.
• Compliance with applicable laws and regulations.

The group is multinational with business units in UK, Spain, Belize and Vietnam. Significant responsibility and authority is delegated to the local business entities. Consequently the local management has a substantial impact on the quality of the risk management and internal control systems of the group.

The group management carries out monitoring activities to ensure that risk management and internal controls are operating effectively.

The internal controls with regard to the financial reporting system comprises of a number of procedures wich can be classified as follows: 

• Segregation of duties
• Guidelines, authorisation and procedures.
• Monitoring

Reliable reporting is ensured by

• Budgeting and prognosis
• Timely bookkeeping
• Reconciliations and other control procedures
• Analysis of accounts
• Monitoring of data from the operations
• Auditing

At every meeting the board of directors is presented updated financial statements and management accounts. The group's auditor is present at the review of the annual report.

The group has no internal auditor.