Controlling and Managing Risk
Risk management approach | Governance, Risk Management and Compliance Framework | Insurance and indemnities
The QIC Board places considerable importance on effective risk management and has adopted a framework designed to proactively identify, assess and manage risks.
The QIC Board has ultimate accountability for risks and is responsible for setting QIC’s corporate strategy and risk appetite, identifying and monitoring risks that may affect our ability to achieve strategic objectives and ensuring that the Chief Executive and ELT are appropriately monitored and incentivised to manage the business effectively.
The QIC Board has put in place Board committees, each of which is responsible for overseeing specific risks facing QIC.
Considerable importance is placed on maintaining a strong control environment. QIC has a corporate structure with clearly drawn lines of accountability and delegations of authority. Adherence to QIC’s policies and standards, including the Code of Conduct and Ethics, is required at all times, and the Board actively promotes a culture of risk awareness, quality and integrity. QIC staff are required to observe a high level of professional conduct when undertaking their business activities and respecting our core values of passion, engagement, innovation, excellence and achievement.
The Chief Executive, Chief Financial Officer and Chief Operating Officer have declared, in writing to the Board, that QIC’s risk management and control system is operating efficiently and effectively in all material respects, based on representations by management.
Risk management approach
QIC adopts a ‘three lines of defence’ approach to managing risks and compliance obligations. The roles and responsibilities within our three lines of defence are shown in figure 1.
First line of defence: Executives and staff within QIC’s investment boutiques and supporting divisions are accountable for identifying and effectively managing risks within their area of responsibility. Staff are required to report breaches and incidents, including near misses and uncontrolled risks, to the Organisational Risk, Legal & Tax team (ORLT). Management is required, as part of the monthly management reporting process, to report any risk events that have been identified and any breaches of QIC policies, standards, laws, regulations and client commitments. Staff have key performance indicators that measure risk and compliance and are linked to their remuneration.
Second line of defence: ORLT, which reports directly to the Chief Executive, provides investment boutiques and supporting business units with tools, training and advice to assist them to effectively manage their risks and compliance obligations. It also monitors and challenges the business where appropriate to provide the Chief Executive and the Board with assurance that risks are being managed effectively and in accordance with QIC policies and standards, laws, regulations and client commitments. ORLT also produces regular risk and compliance reports for the QIC ELT, the sub-committees of the Board and the Board.
Third Line of defence: QIC has appointed Ernst & Young to provide internal audit services. This internal audit function has direct, unfettered access to the QIC Board. The QIC Audit & Risk Committee approves the annual internal audit program, which adopts a risk-based approach to provide assurance over risk management and control activities across QIC. The results of internal audit reviews are reported to both the QIC Audit & Risk Committee and management, who are held accountable for ensuring that recommendations made by our internal auditors are actioned.
Governance, Risk Management and Compliance framework
QIC has a documented framework around our risk management and compliance obligations across a broad category of risk types including:
- strategic
- investment
- product
- project
- legal, tax and regulatory
- operational
- business continuity
- people
- financial
- compliance.
Responsibility for managing and overseeing each risk category is clearly articulated through:
- specific Board policies
- executive standards
- Board and committee charters
- corporate and investment delegations
- the audited internal controls report
- the audited derivative risk statement
- applicable legislation.
Insurance and indemnities
QIC maintains adequate insurance cover with reliable underwriters to protect us from known quantifiable liabilities and risks where that cover is available. This cover includes asset protection, employee accident compensation, general public liabilities and financial loss.
The Board, ELT and staff are, to the extent permitted by law, provided with indemnification against:
- liability to third parties arising out of conduct undertaken in good faith in their capacity as a QIC officer
- the costs and expenses of defending legal proceedings arising out of conduct as described above.
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