SECTION 1: BRC COMPOSITION

4 | Board Risk Committee Guide To help it decide on the most appropriate structure, the Board should understand and consider the following factors: • Environmental drivers . What are the key environmental factors in its industry driving the company’s risk and risk management? • Board primary risk oversight . Ideally, where should primary responsibility for risk oversight reside within the Board? • Board specialised risk oversight . Are there specialised risk areas that require oversight by a separate specialised Risk Committee other than the BRC, and how will these complement and coordinate with the BRC? • Management-level risk oversight . How is risk organised and managed at the executive level? 1.2.5 Key environmental considerations when determining the most appropriate risk governance structure are: • Regulatory drivers . The degree of legislative and regulatory requirements within an industry can determine the need for a separate BRC, or specialised Risk Committees at the Board level. In general, industries such as those in the financial sector that are subject to more regulations may require more time and resources to keep abreast of risks arising from regulatory changes or non-compliance. Regulators may also mandate the formation of BRCs. • Industry drivers . The speed and type of change within an industry and markets impact the risk profile of companies. Industries experiencing a higher rate of change may require more frequent and specialised oversight. • Business drivers . The scale, diversity and complexity of the business, for example, in terms of operations, structure, and geographic locations affect the risk profile of companies. For example, companies with more specialised and technical processes and structures may require a deeper analysis of risks and risk management.