Mechanisms for resolving possible conflicts of interest
The mechanisms for resolving possible conflicts of interest that may arise between NH Hoteles, S.A. and the listed company that forms part
of its group, Sotogrande, S.A., are defined by the Audit and Control Committees attached to the respective companies, which propose the
corresponding solutions that are approved, as appropriate, by the Board of Directors of each company.
D - RISK CONTROL SYSTEMS
D.1 General description of the risk policy of the Company and/or its group, detailing and evaluating the risks
covered by the system, together with an explanation of why these systems are appropriate for each type of
risk.
As a basic risk management tool, the NH Group presents the group’s Global Risk Map. The map was drawn up for the first time in the 2007 financial
year. Since then it has been updated annually with the help of the group’s different corporate departments. The principal purpose of the risk map is to
provide the Group with an effective instrument for guarding against the possible occurrence of the risks identified.
Regarding the company’s risk management, work has been done in 2012 on two fronts:
a) The incorporation of the risk map into a computer application managed by the company itself, which is also used by the company in relation
to processes and procedures. The software allows better management of risks, describing the controls that affect each risk, and improves risk
assessment management capacity.
b) The improvement of the controls implemented to mitigate the operational risks directly associated with the hotel business. This work includes the
implementation of such controls in the company’s front-office tools and the incorporation of new controls. The project had a second phase in 2012.
The business risk control systems of the activities of NH Hoteles, S.A. Group can be classified in the following way:
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Control of financial risk
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Control of strategic development risk
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Control of business, operational and environmental risk
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Control of regulatory risk
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Other preventative procedures
1.
Control system for financial risk
The group controls its financial risks using the following mechanisms:
1.1
Procedures Manual: The relevant operations carried out by the NH Hoteles Group are standardised through an internal procedures manual
covering purchase cycles, asset management, treasury, end of month processes, etc. The regulations applicable to accounting matters for all
national and foreign companies in the Group are also regulated.
1.2
Internal Audit: The Internal Audit Department carries out an on-going function that mainly focuses on identifying risk situations and evaluating their
management. To this end it has defined an annual audit plan that aims to verify the correct application of the established rules and procedures,
both at the level of corporate departments and for different hotels, among other objectives.
1.3
Audit Committee: The Audit Committee, reporting directly to the Board of Directors, is responsible for supervising the correct functioning of
all the Group’s internal control systems. It also periodically analyses the principal risks of the businesses and the systems established for their
management and control. It is also the body responsible for relations with the Group’s external auditors.
1.4
Centralised Management: The Group, through its Finance Department, centrally manages its policies on financing, interest rates and exchange
rates, using non-speculative criteria.
In accordance with the provisions set forth in Article 61 of the Securities Market Act, a detailed description of the financial reporting control
systems is attached hereto as an Annex.
2.
Strategic Risk Control Systems
2.1
The NH Hoteles Group has a team of professionals that analyse strategic opportunities of various types. This team selects the alternatives best
aligned with the Group’s global strategy and submits them to the Expansion and Management Committee, and subsequently to the Executive
Committee and the Board of Directors.
2.2
The Group has identified a number of employees that form an Integration Committee for each acquisition, in order to standardise the policies and
procedures in the different critical areas(human resources, information systems, sales management and marketing...)
2.3
The Expansion Committee, which reports to the Management Committee, analyses the opportunities that arise. It comprises members from each
area in order to analyse all the opportunities and risks of the businesses that arise in the Group.
3.
Risk control systems for business, transaction control and environmental risks.
3.1
The Management Committee meets on a weekly basis. It analyses the information contained in the management charts drawn up by the Corporate
Control Management Department to assess the development of transactions, and closely monitors aspects of the business assessment obtained
through the computer system.
ANNUAL CORPORATE
GOVERNANCE REPORT
41
