3i has a comprehensive risk management framework which provides a structured and consistent process for identifying, assessing and responding to risks in relation to the Group's strategy and business objectives.
As part of this process, risks are considered across the following broad categories:
External | Risks arising from political, legal, regulatory, economic policy and competitor changes |
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Strategic | Risks arising from the analysis, design and implementation of the Group's business model, and key decisions on investment levels and capital allocations |
Investment | Risks in respect of specific asset investment decisions, the subsequent performance of an investment or exposure concentrations across business line portfolios |
Treasury and funding | Risks arising from (i) uncertainty in market prices and rates, (ii) an inability to raise adequate funds to meet investment needs or meet obligations as they fall due, or (iii) inappropriate capital structure |
Operational | Risks arising from inadequate or failed processes, people and systems or from external factors affecting these |
Risk management operates at all levels throughout the Group, across business lines, geographies and professional functions. It is monitored by a combination of the Board, the Audit and Compliance Committee, Management Committee and Risk Committee, supported by the Group Risk Assurance and Audit, and Group Compliance functions. The roles of the Board, Audit and Compliance Committee and Management Committee are described in the Directors’ report. The Risk Committee meets four times a year to oversee movements in risk exposures across the Group and recommends appropriate responses. Its membership includes senior representatives from investment and professional services functions.
Given their fundamental significance to the Group, investment and treasury and funding risks are managed by specific processes which are described in investment risk and treasury and funding risk.