Sonic Healthcare recognises that risk management is an integral part of good management and corporate governance practice, and is fundamental to driving shareholder value across the business.
Sonic Healthcare views the management of risk as a core managerial capability. Risk management is strongly promoted internally and forms part of the performance evaluation of key executives.
Responsibilities
The board determines the overall risk profile of the business and is responsible for monitoring and ensuring the maintenance of adequate risk management controls and reporting mechanisms.
To assist the board in fulfilling its duties, it is aided by the Audit Committee (in relation to strategic and financial risk management) and the Risk Management Committee (in relation to operational and compliance risk management). The board has delegated to these committees, responsibility for ensuring:
- that principal strategic, financial, operational and compliance risks are identified
- systems are in place to assess, manage, monitor and report on those risks, and those systems are operating effectively
- management compliance with board approved policies
- internal controls are operating effectively across the business
- all Group companies are in compliance with laws and regulations relating to their activities.
The Audit Committee and Risk Management Committee regularly update the board on all relevant matters.
Management is responsible for the identification, assessment and management of business risks, and reports on these matters to the Audit Committee or Risk Management Committee through various mechanisms, depending on the nature of the risks.
Risk Management Systems and Processes
Sonic Healthcare's activities across all of its operating entities are subject to regular review and continuous oversight by executive management and board committees.
The Chief Executive Officers of the individual operating companies are responsible for the identification and management of risk within their business. To assist in this, executive management has developed an effective control environment to help manage the significant risks to its operations, both locally and overseas. This environment includes the following components:
- clearly defined management responsibilities, management accountabilities and organisational structures
- established policies and procedures that are widely disseminated to, and understood by, employees
- regular internal review of policy compliance and the effectiveness of systems and controls
- comprehensive training programs for staff in relation to pathology and radiology operational practices and compliance requirements
- strong management reporting framework for both financial and operational information
- creation of an open culture to share risk management information and to continuously improve the effectiveness of Sonic Healthcare's risk management approach
- benchmarking across operations to share best practice and further reduce the operational risk profile
- Sonic Core Values, a uniting code of conduct embraced by Sonic Healthcare employees
- centrally administered Group insurance program ensuring a consistent and adequate approach across all operating areas.
- the appointment of a professional Risk Manager to better coordinate the company's approach to material business risk management.
Regulatory Compliance
Sonic Healthcare’s radiology and pathology activities are subject to Commonwealth and State law in Australia, and similar regulatory control in offshore locations. These laws cover such areas as laboratory and collection centre operations, workplace health and safety, radiation safety, privacy of information and waste management.
Sonic Healthcare’s network of pathology laboratories, collection centres and radiology centres are required to meet and remain compliant with set performance criteria determined by government and industry bodies.
In support of this, Sonic Healthcare’s operating policies and procedures are overseen by internal quality assurance, and workplace health and safety managers who review operational compliance.
In addition, practicing pathologists and radiologists are required to be registered and licensed in accordance with Medical Board and Government regulations. The accreditation and licensing of locations, equipment and personnel is subject to regular, random audits by Government experts and medical peer groups. Sonic Healthcare also undertakes internal reviews to ensure continued best practice and compliance.
Sonic Healthcare's established procedures, focus on best practice, structured staff training and the external review activities serve to mitigate operational risk and support regulatory compliance.
Managing Director and Finance Director certification
Sonic has adopted a policy requiring the Managing Director and the Finance Director to provide the Board with written
certification in relation to its financial reporting processes. For the 2008 financial year, the Managing Director and
Finance Director made the following certifications:
condition and operational results, and
effectively in all material respects in relation to financial reporting risks.