This policy is established to ensure that Horizon Oil implements a comprehensive system of risk identification, assessment and management. The risk management system will form an integral part of the Company’s structure and will be designed to:
Horizon Oil will regularly review the risk factors applicable to the company and ensure that procedures are set in place which are effectively and efficiently managing these risks within the particular context of Horizon Oil’s business strategy and the environment in which the Company operates.
The Board has established a Risk Management Committee which forms an integral part of Horizon Oil’s structure. The Risk Management Committee is to ensure that the Board, directors and the management are aware of all actual and potential risks facing the business and that a system to identify, monitor, assess and manage risk is implemented and effective.
The Committee shall develop and implement a system approved by the Board for the assessment, monitoring and overall management of identified internal and external risks. The Board is responsible for establishing the Committee, appointing Committee members and overseeing its activities.
The Committee’s responsibilities shall include Horizon Oil’s internal control environment, and ensuring that the Company has an integrated framework of internal compliance and controls based on formal procedures and appropriate delegation of authority and responsibility.
The key function of the Committee is to identify and more importantly prioritise risk arising from business strategies and activities and ensure that appropriate risk management controls are implemented and are effective.
Risk monitoring and assessment activities will be designed to reduce, or otherwise manage, risk to levels that are acceptable to the Company.
The Committee provide periodic reports of the results of the risk management process to the Board and management.
In particular the Committee will:
At least annually, the Board will review the effectiveness of the implementation of the risk management system, including all financial and non-financial internal and external risks that face Horizon Oil.
The Committee will comprise four members consisting of a majority of independent non-executive directors. The Board will appoint one of these members as the chairman of the Committee.
The Board will appoint the members of the Committee with due regard to the provisions of the Corporations Act 2001 (Cth).
If a member of the Committee retires, is removed or resigns from the Board, that member ceases to be a member of the Committee. The Board will appoint the successor.
The Committee may invite any senior management member or any other individual to attend a meeting of the Committee, as they consider appropriate.
The company secretary is the secretary of the Committee.
The Committee will meet as frequently as required but not less than once a year. Any Committee member or the company secretary may call a Committee meeting.
A notice of each meeting confirming the date, time, venue and agenda must be forwarded to each member of the Committee (with a copy to all board members) seven working days before the date of the meeting. The notice for members will include relevant supporting papers for the agenda items to be discussed.
The Committee is entitled to direct any special investigation that the Committee considers appropriate and to consult any independent expert that the Committee considers appropriate to carry out its duties. Horizon Oil bears the costs of any such investigation or consultations.
The Committee chairman, or delegate, will report to the Board following each meeting.
The Committee will prepare for approval by the Board any report, the subject of this policy, that may be:
Minutes of proceedings and resolutions of Committee meetings will be kept by the secretary. Minutes will be distributed to all Committee members and the chairman of the Board, after the Committee chairman has given preliminary approval. Minutes, agenda and supporting papers will be made available to any director upon request to the secretary, providing no conflict of interest exists.
A quorum will comprise three directors, two of whom shall be independent non-executive director Committee members. In the absence of the Committee chairman or appointed delegate, the members will elect one of their number as chairman for that meeting.
Each member will have one vote and the chairman of the Committee will not have a second or casting vote.
The Chairman of the Committee will liaise with the Chairman of the Audit Committee to ensure that areas of overlap between the two Committees are appropriately addressed and that matters which are properly the responsibility of the Audit Committee are not separately dealt with by the Risk Management Committee.
The Committee chairman will conduct an annual review of this policy and charter to ensure that it continues to reflect the current best industry practice processes. The Board will need to approve any amendments that stem from the review.