42
E.3 State the main risks, including tax risks, which may affect business goal achievement.
a) Financial Risks, such as fluctuation of interest rates, exchange rates, inflation, liquidity, non-compliance with financing undertakings, restrictions
on financing and credit management.
b) Compliance Risks, arising from possible regulatory changes, interpretation of legislation, regulations and contracts, and non-compliance with
internal and external regulations. Tax risks are included under this heading.
c) Business Risks generated by inadequate management of procedures and resources, whether human, material or technological. This category
encompasses difficulty in adapting to changes in customer demand and needs.
d) Systems Risks, produced by attacks or faults in infrastructures, communications networks and applications that may affect security (physical and
logical) and the integrity, availability or reliability of operational and financial information. This heading also includes business interruption risk.
e) Reputational Risks, arising from the company’s behaviour which negatively affect fulfilment of the expectations of one or more of its stakeholders
(shareholders, customers, suppliers, employees, the environment and society in general).
f) External Risks, arising from natural disasters, political instability or terrorist attacks.
g) Strategic Risks, produced by difficulty accessing markets and difficulties in asset disinvestment.
E.4 State whether the entity has a risk tolerance level, including for tax risk.
NH Hotel Group, S.A. has a risk tolerance level which mainly depends on NH Hotels’ financial and equity capacity when it comes to taking on
materialisation of certain risks.
For tax matters, the Group acts in line with that set out in its Corporate Tax Strategy.
E.5 State which risks, including tax risks, have had an impact over the year.
The materialisation of risks is inherent to the activity carried out by the group. NH Hotel Group provides detailed information about its risks in its
annual accounts, specifically in its management report. The risks that materialised during the financial year have not had a significant impact on NH
Hotel Group’s Financial Statements.
E.6 Explain the response and supervision plans for the entity’s main risks, including tax risks.
The design of the response to the Risk takes into account the cost/benefit analysis between the impact of the Risk and the actions to be taken to
manage it, the appetite and tolerance for Risk and the strategic goals of the NH Hotel Group.
The NH Hotel Group follows an extensive coverage policy by taking out insurance policies for the risks to which it is exposed. It also has a policy of
continuously reviewing this coverage.
The Strategy Department oversees the achievement of strategic goals by continuously monitoring strategic initiatives and detection of new risks.
The Internal Audit Department supervises implementation of response plans to manage the main risks. The Audit and Control Committee regularly
carries out the following supervisory and control functions, as specified in Article 25 b) of the Regulation of the Board of Directors.
The Tax Department oversees the Group’s tax risk management. The Group is working, as part of its Corporate Tax Strategy, on designing a Tax Risk
Management and Control Procedure with a view to providing a response and overseeing any tax risk that may exist, whether in Spain or in the other
countries where it operates.
ANNUAL CORPORATE GOVERNANCE REPORT
