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Risk Management and Risk Factors
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RISK MANAGEMENT In a rapidly changing economic environment, companies feel compelled to manage uncertainties swiftly and efectively. Identifcation and control of risks emerged at the forefront of attaining the goals. In order to address this exigency, a Corporate Risk Department is established within the scope of the Company. Management of fnancial risk is under the authority and responsibility of the Head of the Financial Afairs Group and monitored under the supervision of Financial Afairs, Financing, Budget and Corporate Risk Departments. The Audit Committee and the Corporate Governance Committee also advise the Board of Directors about issues concerning risk management and the internal control mechanism, along with their proposed solutions as and when required. The Company took on the current crisis climate in the most efective, efcient and robust manner owing to the prepared reports. Compiled to facilitate adoption of necessary measures, the reports included briefngs and proposals ranging from routing investments only to areas with a fast rate of return, to curtailing all kinds of expenses, from employing available resources in an efcient and maximized way, to draw short- and medium-term contingency planning, thereby enabling the Company to take action. The Corporate Risk Department ensures that all kinds of risks (Financial, Operational, Strategic and Compliance) that might pose a threat to the Company are kept up-to-date on a risk radar and the Company is safeguarded from adverse efects, turning risks into benefts and advantages. The Corporate Risk Department is designed as a unit identifying critical risks, measuring their impact, balancing the strategies and business processes of the organization and generating solutions. The Financial Risks the Company is Subject to are; Interest rate risk: Hürriyet and its subsidiaries are subject to interest rate risk due to their interest-sensitive assets and liabilities. These risks are managed through the balancing of interest rate-sensitive assets and liabilities. Funding risk: Existing and forward-looking borrowing requirements are performed by securing sufcient funding commitments from lending companies with high funding capability and quality. Credit risk: Financial asset ownership comes with counterparty risk. These risks are managed by limiting credit exposure to each recipient. The Company’s credit risk is dispersed to a great extent thanks to the large number of recipient and that they operate in diverse business lines. Exchange rate risk: Hürriyet and its subsidiaries are subject to exchange rate risk due to the changes of the exchange rate used in converting their foreign currency-denominated debt to the Turkish Lira. This risk is monitored through foreign currency position analysis (Note 33 in “Notes to Consolidated Financial Statements for 2008). Operational Risks Receivables Risk: Due to the Financial Global Crisis currently underway, a collections risk emerged. A package of necessary measures was drawn to avert this risk. Compliance Risk: Concerning all kinds of risks arising from contracts drawn for purchases of goods and services, the Company is supplied with the relevant legal provisions to vindicate its rights. Measures are taken to ensure that the contracts are kept up-to-date and regularly monitored. INTERNAL CONTROLS The global economic crisis that dominated 2008 had a negative impact on the world economy, in particular the fnance and real industries. The Turkish economy and industries in Turkey have also been adversely afected by the spillover of the global crisis. Under such circumstances, the importance of internal audit and internal control systems is further emphasized. The primary duties of the Internal Control departments are to produce independent reports on the efectiveness and efciency of operations of the Company, on the accuracy of the accounting records, reports and fnancial statements. Additionally, duties include compliance with regulations and directions approved by the management and to create an efective internal control structure by reviewing the existing internal control structures and swiftly notify management. The Company’s existing practices regarding internal controls were reviewed and eforts were made to identify internal control points in 2008. The inspections and reliability of the monthly accounting reports and fnancial statements were tested. The team took part in the end-of-period inventory counts to physically monitor and report on the results. Furthermore, Doğan Yayın Holding Internal Audit Department performed an audit covering all of the Company’s regional ofces and printing facilities. It then drafted an action plan based on ensuing audit report and ensured implementation of the proposed actions in accordance with the plan. Legislation was monitored for recent changes that might afect the business. In 2008, groundwork was laid for the transition to risk-based internal control structures and joint eforts were undertaken with the Risk Management Department in areas where risks were identifed. The issued reports facilitated swift action and enabled the Company to face the current crisis environment in the most efective, efcient and robust manner. Declaration of the Board of Directors Regarding the Proper Functioning of the Internal Control System Resolution No. 2009/26of the Board of Directors, dated April 7, 2009; Based on the work performed and reports prepared in 2008 by the Internal Audit Unit, which was established to assess the efectiveness and efciency of the internal control systems in light of the Principles and Standards of Corporate Governance, we observe that the organization is being managed in accordance with Company objectives and that operations are performed in conformity with the fnancial statements and applicable legislation. Consequently; The Board of Directors has unanimously decided to declare that the Company has in place an efective and properly-functioning internal control system, considering that, in 2008, the main risks were identifed, continuously monitored and minimized and that the existing internal control activities were frequently and continuously evaluated, in line with the objectives we have determined. |
