THE SPAR GROUP LIMITED RISK COMMITTEE TERMS OF REFERENCE Effective date: 11 November 2014 Review cycle: Document retention period: Complied by: Reviewed and support by: Target users/audience: Annual Permanent Company Secretary The Board and The Risk Committee All stakeholders DESCRIPTION OF LAST THREE REVISIONS REVISED BY DATE Revised Company Secretary August 2014 Revised Company Secretary July 2013 Revised Company Secretary August 2012 Revised Company Secretary August 2011 Revised Company Secretary August 2010
1. INTRODUCTION The Risk Committee (the Committee) is constituted as a committee of the Board of The SPAR Group Limited (the Company) for the purposes of risk and IT governance. The duties and responsibilities of Committee members, who are also members of the Board, are in addition to those as members of the Board. The decisions of the Committee shall not reduce the responsibilities of Board members in regard to their fiduciary duties and responsibilities to the Company in accordance with their statutory obligations. The Committee shall comply with and act in accordance with the provisions of the Companies Act, the Company s Memorandum of Incorporation and any other applicable law or regulatory provision. 2. PURPOSE OF THE TERMS OF REFERENCE The purpose of the Terms of Reference is to set out the Committee s role and responsibilities in: the identifying and monitoring of risks that may affect the Company as well as the requirements for its composition and meeting procedures. Ensuring that prudent and reasonable steps have been taken with respect to Information Technology (IT) governance 3. COMPOSITION The Committee shall comprise of at least three independent non-executive directors, the chief executive officer and the financial director and such other members as the committee may elect. Members of the Committee and its chairman shall be nominated by the Board. The chairman of the Audit Committee shall be a member of the Committee. The members of the Committee as a unit must have adequate qualifications and/or experience to fulfil their duties as committee members. 4. ROLE The Committee shall function independently of the Board and shall oversee the risk management of the Company and make recommendations to the Board for consideration and final approval. The Committee does not assume the functions of management, which remain the responsibility of the executive directors, officers and other members of senior management. Risk Committee Terms of Reference August 2014 2
The role of the Committee shall be to assist the Board to ensure that:- the management has identified potential risks that may affect the Company or its operations and has implemented an effective Risk Management Policy that will enhance the Company s ability to achieve it strategic objectives; and the disclosure regarding risk is comprehensive, timely, and relevant. 5. RESPONSIBILITIES The Committee shall perform all such functions as may be necessary to fulfil its role as stated above and including the following: 5.1 Risk 5.1.1 Gain assurance that there is comprehensive and effective management of strategic risks, fraud risks, physical risks, financial risks, health and safety risks and compliance risks; 5.1.2 Gain assurance that there is a proper process on business rescue proceedings or other turnaround mechanisms as soon as the Company is financially distressed as defined in the Companies Act; 5.1.3 Annually review the Risk Management Policy. 5.1.4 Annually review the Risk Management Action Plan and monitor implementation thereof. 5.1.5 Make recommendations to the Board concerning acceptable levels of risk tolerance. 5.1.6 Gain assurance that risk management assessments are performed regularly. 5.1.7 Liaise with the Audit Committee on risk related matters. 5.1.8 Express the Committee s formal opinion to the Board on the effectiveness of the risk management process. 5.1.9 Review the risk management report which is to be included in the Company s Annual Integrated Report. 5.2 Information Technology (IT) 5.2.1 Gain assurance that IT is aligned with the performance and sustainability objectives of the Group 5.2.2 Gain assurance that IT risk forms part of the organisation s risk management initiatives 5.2.3 Gain assurance that the IT governance framework is properly implemented 5.2.4 Gain assurance that information assets are managed effectively 5.2.5 Monitor and evaluate significant IT investments and expenditure 5.2.6 Evaluate how IT can be used to aid the organisation in managing its risk and compliance requirements 5.2.7 Gain assurance that the Group s overall exposure to IT risks is measured and that there are proper processes in place to manage these risks Risk Committee Terms of Reference August 2014 3
6. AUTHORITY The Committee shall act in terms of the delegated authority of the Board as recorded in this Terms of Reference and shall have the power to investigate any activity within the scope of its Terms of Reference. The Committee, in the fulfilment of its duties, may call upon the chairman of any other Board Committee, any of the executive directors, officers or company secretary to provide it with relevant information. The Committee shall have reasonable access to the Company s records, facilities and any other resources necessary to discharge its duties and responsibilities. The Committee may form, and delegate authority to subcommittees or to one or more designated members of the Committee The Committee shall have the right to obtain independent outside professional advice to assist with the execution of its duties, at the Company s cost. The Committee shall make such recommendations to the Board that it deems appropriate on any area within the ambit of its Terms of Reference where action or improvement is required. 7. MEETING PROCEDURES 7.1 Frequency The Committee must hold sufficient scheduled meetings to discharge all its duties as set out in these Terms of Reference but subject to a minimum of two meetings per year. Meetings in addition to those scheduled may, with approval of the chairman, be held at the request of the chief executive officer or at the instance of the Board. 7.2 Attendance Committee members shall attend all scheduled meetings of the Committee, including meetings called on an ad hoc-basis for special matters, unless a prior apology, with reasons, has been submitted by the Committee member to the chairman or company secretary. In addition to the attendance of the Committee members, company officials and / or appropriate third parties may be invited to attend meetings. The company secretary shall act as the secretary to the Committee. If the nominated chairman of the Committee is absent from a meeting, the members present shall elect one of the members present to act as chairman. Risk Committee Terms of Reference August 2014 4
7.3 Agenda and Minutes The Committee shall on an annual basis establish a work plan (refer attached appendix) to ensure that all relevant matters are covered by the agendas of the meetings planned for the year. The work plan must ensure proper coverage of the matters laid out in these Terms of Reference. Critical matters will need to be attended to each year while other matters may be dealt with on a rotation basis over a three year period. The number, timing and length of meetings, and the agendas are to be determined in accordance with the work plan. A detailed agenda, together with supporting documentation, shall be circulated, at least one week prior to each meeting to the members of the Committee and other invitees. Committee Members must be fully prepared for Committee meetings and should provide appropriate and constructive input on matters discussed. Committee members should be fully prepared for Committee meetings and be capable of providing appropriate and constructive input on matters requiring discussion. Minutes of the proceedings shall be maintained and circulated as soon as possible after the meeting to the chairman and members of the Committee for review thereof. Meeting minutes must be formally approved by the Committee at its next scheduled meeting. 7.4 Quorum 8. EVALUATION A representative quorum for meetings shall be three members. Individuals in attendance at Committee meetings by invitation may participate in discussion but shall not form part of the quorum for Committee meetings. The Board shall perform an evaluation of the effectiveness of the Committee annually. Risk Committee Terms of Reference August 2014 5