The risk management committee operates under an approved charter assisting the Board to fulfil its corporate governance supervision responsibilities over the development and implementation of the group risk framework.

Membership

The committee consists of four independent non-executive directors. During the year under review SP Sibisi served as chairman of the committee with DD Barber, IN Mkhize and RT Vice as members. The group chief executive, group financial director, group head of assurance and group risk manager attend meetings ex officio.

Subsequent to the year end, WA Nairn was appointed a member of the committee.

The committee met twice during the year under review.

The committee terms of reference were reviewed and approved by the Board during the year.

Risk management

The group risk framework is largely implemented and significant risk management structures now exist. The framework serves to regulate the entry of risk into Murray & Roberts and systematically manage threats, while exploiting opportunities.

A risk committee of the Murray & Roberts executive committee (Murray & Roberts Limited) acts as custodian of the group risk appetite, reviews group level risk and interrogates key decisions prior to board approval. During the year, the committee reviewed 11 major project bids.

Currently 16 of the Group’s project companies utilise the opportunity management system (OMS). This world class project portfolio management system was developed in-house to filter and highlight project risks entering the Group’s environment. At 30 June 2010 opportunities in the active pipeline amounted to R68 billion. During the year the system supported 1019 decisions and processed 7065 workflow transactions.

Two group level risk assessments were conducted with group executives, in support of the 2010 half year and year end results. Nineteen business plan strategic risk assessments were conducted by the operating companies, as well as a range of project risk assessments. Taking risk management to the next level is a strategy to capitalise on the collective wisdom of the organisation and identify and pre-empt the major, but sometimes less obvious, risks in the environment.

Internal audit

The Group has a risk based approach to internal audit, aimed at testing the integrity of controls managing significant exposure. An internal audit coverage plan has been developed with co-sourced internal audit partners, KPMG. In addition to Group Internal Audit, assurance is provided by audit specialists; dedicated operational resources; peer review at operational level and management review at board, executive committee or project meetings. Approximately two thirds of operating companies within the Group are ISO 9001 accredited.

Insurance

Murray & Roberts has a group insurance program covering asset and liability risks.

Claims and litigations

The group commercial director and commercial executives in the operations, supported and advised by external legal and commercial consultants manage the Group’s contractual risk.

The group commercial director leads the engagement of general litigation and reputation risks to the Group, supported as appropriate by external legal advice.

Bonds and guarantees

The OMS establishes a process discipline ahead of the issuing of bonds and guarantees, which is integrated with the treasury management system utilised for guarantee administration.

Forensics

The Group employs a firm of forensic consultants and investigators that report directly to the group chief executive. “Ask Brian” on the Interchange and the CE Discussion Forum on the website promote transparent direct communication with the group chief executive. “Tip-offs Anonymous”, an independent hotline service provider, is available to report inappropriate behaviour in the workplace.

Global engagement

The Group is a founding member of the Engineering & Construction Risk Institute (ECRI), an association of global engineering and construction companies which aims to institutionalise sound risk management practice in the global industry.

Murray & Roberts is a signatory to the United Nations Global Compact on Transparency and Crime.

Sibusiso Sibisi
Chairman