Risk management is a principle we take seriously at Dangote Cement. It is considered pivotal to the achievement of our corporate goals.
We have taken a more holistic view of risk management, so that we have an enterprise-wide view of risk management that goes beyond the management of one single risk.
Board Audit and Risk Committee Mandate
The Board has overall responsibility for the assessment and management of risks in Dangote Cement. It is responsible for risk supervision and the day-to-day management of the Company with the objective of creating a sustainable increase in value in the interests of our shareholders, employees and other stakeholders.
The Board is responsible for effective management of risks in Dangote Cement, and monitors the risk profile of the Group via its designated committee – The Board Audit and Risk Management Committee (“BARMC”).
The Chairman of the BARMC reports on key risks discussed at its quarterly meetings to the Board. The Board has approved the BARC Charter which provides guidance to the Committee on its role and responsibilities. The Committee is responsible for review and formulation of the Company’s risk policies; organisation and governance of risk management; oversight of the execution of risk management including identification, analysis and risk mitigation, within the scope of the risk appetite approved by the Board. The committee may be supported by specialized risk sub-committees from time-to-time.
Appropriate guidelines, principles and procedures have been applied across the Group for the implementation of systematic and effective risk management that is integrates with daily business activities.
As a result, some operating risks are managed at departmental or Company level whilst others requiring specific competences, economies of scale or combined efforts are managed at Group level.
This integrated approach which encompasses all the Group’s activities and adds value to its growth whilst protecting shareholders assets, delivers the high quality of Enterprise Risk Management capability required for multinational organization as Dangote Cement. Consequently, the tenets of our risk philosophy is guided by the following risk management principles:
- All employees are responsible for the management of risk;
- The Group’s defined Risk Appetite governs the level and type of risk it takes;
- The risk/reward balance is considered for all risk taken; and
- Risk must be continuously monitored and managed.
Principal Risk Category
As a multi-national cement manufacturing Company, the implementation of our strategic thrust as depicted by our mission can be impeded by various risk types. Our risk management approach ensures the appropriate identification, classification, and treatment of risks.
The risk types outlined below are considered by the Board as the most significant risk exposures of Dangote Cement.
Relevant mitigation strategies deployed in managing these risks to ensure alignment with its mission statement and value proposition to all stakeholders are also captured.
Dangote Cement actively takes on risks in pursuit of our business objectives. These are underpinned by our commitment to being an organisation with a high-quality Enterprise Risk Management capability, which encompasses all our activities and adds value to economic growth and the protection of our shareholders’ assets.
Consequently we execute our philosophy guided by the following risk-management principles:
- The management of risk is the responsibility of all employees
- Risk is taken within a defined risk appetite and profile
- Risk taken needs to be adequately balanced with measurable reward
- Risk must be continuously monitored and managed
The investment and resource allocation made in risk management aims to achieve the following:
- Timely identification of material risks within Dangote Cement;
- Ensure enhanced risk-taking and informed decision-making across the business;
- Provision of an effective risk management platform that would support the Group’s growth strategy;
- Ensure that business activities and plans are aligned with the Group’s risk appetite; and
- Ascertain and understand risk profiles at departmental, country and Group levels, and ensure business continuity even during adverse economic conditions.
At the core of the business model and strategy for growth and sustainability is the need for a strong risk culture in the organization. As such, risk management is considered the responsibility of all executives, management and employees.
The grooming of all stakeholders to have the desired risk culture is being achieved through continuous awareness sessions and deployment of initiatives which support understanding, trust and openness.
This approach ensures rigorous, analytical, independent, and objective risk-taking and decision making that is consistent across the Group. The expected behaviours of all employees remain:
- Placing Dangote Cement and its reputation at the heart of all decisions;
- Being fully responsible for our risks;
- Being rigorous, thorough and proactive in the assessment of risk;
- Brain storming and troubleshooting collectively in the assessment of risks.
Risk Governance and Organizational Structure
Dangote Cement manages its risk using a hybrid approach where ownership for risks identified and controls implemented belong to stakeholders at the departmental, country or Group levels. The ultimate responsibility for effective and efficient risk management organisation-wide resides with its Board of Directors, and this responsibility is delegated and cascaded in a manner that ensures full ownership by process owners of respective business activities at the strategic, tactical and operational levels of the organisation. Risk is a shared responsibility between the business owners and risk teams with the business operating as a ‘first line of defence’.
Our risk appetite is a reflection of the maximum level of risk that we are prepared to accept in order to achieve our business objectives. It has been defined and approved by the Board to ensure that risk is proactively managed at a desired level across the organization.
Dangote Cement’s governing Risk Appetite Statements are given below:
Regular review of the Group’s risk appetite is performed to ensure consistency with its strategy, business environment and stakeholder requirements.
Our Risk Appetite Statements enable us to convert our strategy into tangible targets with qualitative and quantifiable tolerance levels for monitoring all major risk categories across the business.
Using Dangote Cement’s Risk Appetite Statements; tolerance levels, thresholds and targets are set at different trigger levels, with clearly defined escalation requirements that enable appropriate actions to be considered and implemented as required to manage these risks.
For more details on how we manage risk at Dangote Cement please view our online Annual Report.