02. PRISA, a global group Annual Report 2013 31 the risks inherent in the Group, that is used to identify and assess risks that affect the development of the different business units. The parameters evaluated in each risk to define their location on the risk map are the impact and the probability of occurrence of that risk. The identification of these risks and the operative processes in which each of the risks considered are managed are carried out by the General Managements of the business units, and added and homogenized by the Group’s Internal Audit Office, which periodically reports the results to the Audit Committee. The respective managements of the business identify both those responsible for risk management and action plans and associated controls. The principal risks considered within the framework of the Group’s risk management policy can be classified in the following categories: a. Strategic risks. b. Business process risks. c. Financial management risks. d. Control of Risks Derived from the Reliability of Financial Information. Control systems in place to evaluate, mitigate or reduce the principal risks of the Company and its Group: Control of strategic risks The Chairman and the CEO are responsible for the day-to-day management of the Group, without prejudice to the general supervisory functions of the Board of Directors and its Executive Committee, to which all powers that may legally be delegated have been granted. By authority of the Chairman and the CEO, Group management determines the Group’s strategic plan, defining the objectives to be met for each business area, developmental goals and growth rates, based on both national and international market conditions, taking into consideration in those plans the appropriate risk levels for each business and market, based on the maturity and of the Group’s positioning. The Group’s general policies and strategies require the Board of Directors’ prior authorization, mainly the strategic or business plan, as well as management objectives, the annual budgets and investment policies. Compliance with the Strategic Plan and budgets are review periodically, analyzing the degree in which they are being fulfilled, evaluating deviations and proposing corrective measures. Managers from all business units are involved in this process, as well as the general and functional committees that issue their reports to senior Group management. Control of business process risks To develop and supervise business activity, the Group relies on a decentralized organization divided into specialized business units with coordinating entities such as the Management of Business Committee, which carry out analysis and supervisory functions with respect to the evolution of business activities, as well as the operational environment and problems of the business units. The transactional business risks, as well as operational, commercial, legal, fiscal and other types of risks are monitored by the respective organizations of the business units, with supervisory mechanisms in place for each at the corporate level: ƒƒ The risk inherent in the Group’s operations in sectors highly regulated such as radio and television that, generally are presented in temporary administrative concession or license, and that in some countries contemplate limitations on ownership and transfer of companies in these sectors, is evaluated by the General Managements of the respective business units and at corporate level supervised by General Secretariat. ƒƒ Likewise, the risks associated with reliance on Group income macroeconomic cycle, mainly by advertising and circulation revenue for newspapers, are continuously monitored by the Commercial Managements of the business units, and by a specialized Advertising Committee, that evaluates the adequacy of the supply of services and products to customer requirements. In that regard, we should underscore that, in comparison with other companies in the sector, Group revenue is less dependent on advertising commercial cycles due to the SANTILLANA publishing business and, above all, the pay television audiovisual business, which show periodic and recurring fluctuations.
PRISA Annual Report 2013
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