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Financial Department
The Financial Department is responsible for establishing the global design, implementation and monitoring of the Internal Control System in the
Group’s Financial Information.
Strategy Department
The Strategy Department is entrusted with monitoring each of the strategic initiatives through the KPIs (Key Performance Indicators).
Risk and Compliance Office
The Risk and Compliance Office is part of the Internal Audit Department and is entrusted with preparing the Map of Corporate Risks and monitoring
the action plans agreed with each risk manager and their relationship to the strategic objectives.
E.3 State the main risks which can affect business goal achievement.
a) Financial Risks, like fluctuations of interests rates, exchange rates, inflation, liquidity, breach of finance undertakings, finance restrictions and credit
management.
b) Compliance Risks, deriving from possible regulatory changes, changes to the interpretation of legislation, regulations and contracts, as well as
breach of both the internal and external regulations.
c) Business Risks generated due to the inappropriate management of processes and resources, whether human or material and technological.
Included in this category is the difficulty to adapt to the changes in the demand and the client’s requirements.
d) Systems Risk, produced due to attacks or faults in the infrastructure, communication networks and applications which may affect the security
(physical and logical), as well as the integrity, availability and reliability of the operative and financial information. This section also includes the
risk of business interruption.
e) Reputation Risks, deriving from the company’s behaviour which has a negative effect on the satisfaction of the expectations of one of more of its
stakeholders (shareholders, clients, suppliers, employees, environment and society in general.
f) External Risks, resulting from natural disasters, political instability or terrorist attacks.
g) Strategic Risks, produced due to the difficulty in accessing markets and difficulties in asset disinvestments.
E.4 State whether the entity has a risk tolerance level.
NH Hotel Group, S.A. has a risk tolerance level which basically depends on the financial and asset capacity of NH Hoteles when it comes to assuming
the materialisation of certain risks.
E.5 State which risks have had an impact over the year.
The following risks have materialised during the financial year:
Exchange rate risks: exchange rate fluctuations, specifically the Argentinean peso.
Credit management risk: impossibility for some clients to meet their debt with the Group. The balances have been provided for and in some cases
are guaranteed by insurance policies.
Business risk: drop in the demand as a result of the economic situation and changes in the scheduling of evens. The fall in occupation has been offset
by an increase in prices.
Strategic risk: asset disinvestment as a result of the contractual obligation with the majority shareholders. The impact was not significant in the
Group’s results.
E.6 Explain the response and supervision plans for the entity’s main risks.
The design of the Risk response takes into account the cost/profit analysis between the impact of the Risk and the actions to be implemented in
order to manage it, the Risk appetite and tolerance and the strategic objectives of the NH Hotel Group.
The NH Hotel Group follows a broad hedging policy by signing insurance policies for those risks which can be transferred. It also has a policy of
continuous hedging review.
The Strategy Department supervises the attainment of the strategic objectives through the continuous monitoring of the strategic initiatives and
detection of new risks.
The Internal Audit Department supervises the implementation of the response plans in order to manage the main risks.
The Audit and Control Committee regularly performs the supervision and control functions, as specified in the Regulations of the Board of Directors
in its article 25 b).
ANNUAL CORPORATE GOVERNANCE REPORT
