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Risk control systems

Telecinco’s Risk Management System, which was implemented in 2007, is based on Enterprise Risk Management (ERM) of the Committee of Sponsoring Organizations of the Treadway Commission (COSO II) and sets forth a series of standards, procedures and an organisational structure focusing on sound and correct company management consistent with the set objectives.

This risk management system aims to identify, control and manage the risks that may afect the attainment of the set objectives. In addition, it enables the impact to be assessed in euro of each of the risks identifed, the probability of occurrence and the level of control existing over each.

As part of the risk system, noteworthy is the Integrated Corporate Risk Management Policy with the following specifc objectives:

Overseeing operational efciency and efectiveness.

Protecting the Group’s assets.

Guaranteeing the reliability and integrity of fnancial information.

Compliance with applicable legislation, regulations and contracts.

Broadly speaking and as a basic part of the fnancial controls, Telecinco submits its fnancial information and annual accounts to review by a renowned external audit frm.

From the point of view of risks, in 2010 Telecinco conducted through Internal Audit Management a detailed analysis of the risks that could potentially afect the attainment of the objectives defned by the Company.

The main conclusions drawn are as follows:

Telecinco has increased its level of accepted risk as compared with 2009 as a result of the current global downturn and excessive reliance on the decisions of the authorities.

The television business is still highly competitive in terms of both viewers and budget revenues.

Telecinco’s main risks are the credit risk, the liquidity risk and the market risk.

There are risks deriving from Telecinco’s investment in Endemol and the purchase of that producer’s debt.

Thanks to technological advances, in 2010 piracy risks have increased because of the permitting of illicit distribution, public disclosure and availability over the Internet of television content and flms the exploitation rights of which are owned by Telecinco.

In 2010 Telecinco identifed risks associated with the acquisition by Telecinco of the free television channel Cuatro and a 22% interest in DTS Distribuidora de Televisión Digital S.A.

Internal Audit Management prepares the Annual Audit Plan which is submitted for discussion and approval to the CEOs and subsequently to the Audit Committee for explanation and approval. The Audit and Compliance Committee met on fve occasions to contribute to the presentation of the Group’s fnancial information.

In 2010 Audit Management devoted 45% of their time to the performance of operational audits, 30% to compliance audits and 25% of risk assessment and review.

Corporate Responsibility 2010

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