Liontrust Responsible Capitalism Report 2024 - Flipbook - Page 124
RESPONSIBLE CAPITALISM AND RISK MANAGEMENT
Responsible Capitalism and the assessment of risk and opportunity
go hand in hand, both in terms of Liontrust’s own business operations
(at the Group level) and in terms of the investments the Group’s fund
management teams make on behalf of clients (at the investment level).
Understanding the risks for the Group enables Liontrust to focus its
efforts on mitigating those exposures, so that its business, as an asset
manager, is more efficient and able to service clients better. Similarly,
it may be helpful for the investment teams to understand the main risks
and opportunities that their investments face, especially within the
context of their individual investment processes. Many of the main risks
that Liontrust’s own business faces are similar to those that are faced by
Liontrust investee companies.
The Group provides details on its investment teams’ investment
processes and the engagements each has undertaken during the
reporting period.
LIONTRUST AND RISK - HOW THE GROUP ASSESSES RISK
Liontrust reports extensively on its risk management processes and
systems in the Liontrust Asset Management PLC Annual Report and
Financial Statements. The Group thinks holistically about risk and is
building in opportunity assessment into this framework. As noted in
the Liontrust Asset Management PLC Annual Report and Financial
Statements, Liontrust’s Enterprise Risk Management (ERM) framework is
overseen by the Risk team and is used to ensure that the Group regularly
reviews and monitors all the potential areas of risk to the business. This
framework enables management, the Audit & Risk Committee, and the
Board to be kept fully informed of potential risks to the business and
how these risks would impact the Group’s capital adequacy.
In terms of its investments, Liontrust monitors its investment teams and
funds to ensure prudent levels of risk are taken to meet the investment
objectives and policies of the funds. The funds have pre-determined
risk controls and these are supported by the investment teams, the
investment processes and by the Risk team.
LIONTRUST’S RISK STRUCTURE
The diagram below summarises the key elements of the Group’s
ERM Framework which is based around these risk areas to ensure a
consistent approach across the framework.
Liontrust Board
Audit & Risk Committee
Risk Appetite
Statement (RAS)
Internal Capital Adequacy
and Risk Assessment
(ICARA)
Credit Risk Report
124 - Responsible Capitalism Report 2023
Operational Risk Report
Enterprise Risk Report
(regular risk reporting)
Portfolio Risk Report
Other risk summary