Lopez Holdings

 

RISK MANAGEMENT

The executive officers and staff members of Lopez Holdings Corporation have been implementing a corporate risk management program since 2002, in line with an enterprise-wide risk management system.

Risks that may hinder the achievement of corporate goals and objectives are identified and reviewed regularly to ensure that mitigation measures are in place to adequately respond to and manage such risks.

The FPH chief risk officer on August 13, 2018 and the ABS-CBN chief risk officer on November 14, 2018 presented the top risks of the FPH Group and the ABS-CBN Group, respectively, to the Board Risk Oversight Committee of the Lopez Holdings board. The presentation included action plans to address such risks, each company’s risk framework, controls, prioritization and alternative mitigation plans. The top risks of investees serve as vital inputs to the regular risk management process of Lopez Holdings.

Its risk impact assessment process was reviewed by external parties when it underwent a transition audit in June 2018, and then certification for ISO 9001:2015 in July 2018. The current version (2015) of ISO 9001 emphasizes risk-based thinking to enhance the application of the process approach (see Quality Management below).

The company complies with the Data Privacy Act. It has a Board-approved data privacy policy, appointed a data protection officer and established a data privacy system to protect individual personal information in its information and communication systems.

TOP RISKS

Through continuous monitoring and management, appropriate mitigation strategies were prepared and/or implemented to address the top risks evaluated by the company to be the most significant and/or most likely, as follows:

Customer (Stakeholder) wants/satisfaction risk

Requirements of Lopez Holdings stakeholders vary and the company may be unable to meet all requirements in a timely manner. Regulators require compliance with rules and regulations; creditors require the settlement of all obligations; shareholders require a fair return on their investment; associated companies require financial and other forms of support; senior management requires current and accurate information on group-wide operations; employees require compensation and benefits.

Lopez Holdings adequately served the needs of shareholders, employees, associated companies, regulators and senior management in 2018. It has no direct obligations, and therefore, no creditors.

Business interruption risk

Prolonged interruption in operations may stem from disasters such as earthquake or fire that may damage office premises.

As part of safety measures, employees regularly train in disaster risk reduction and emergency response (see section on Employee Wellness and Safety). Off-site information systems are in place to ensure continuous operations from remote or mobile locations, should the situation require. Operations were unhampered with the change of office location from Pasig to Mandaluyong in April 2018.

OTHER RISKS

In 2018, the following risks were deemed to be less significant and/or less likely:

Capital availability or cash flow (liquidity) risk

This refers to the company’s exposure to the risk of lower returns on its investments or the necessity to borrow due to shortfalls in cash or expected cash flows, or variances in their timing. There is risk that cash flows from dividends and asset sales may not come in as expected. Lopez Holdings has no direct debt to service.

Foreign currency exchange risk and foreign currency revaluation risk

Volatility in foreign currency exchange rates may expose Lopez Holdings to economic and accounting losses related to direct and indirect obligations. Extraordinary fluctuations in foreign currency exchange rates may affect reported operational profits and deficit, potentially reducing the ability of associated companies to declare dividends. The company does not have any direct obligations. It is monitoring the mitigation plans of associated companies in relation to foreign currency exchange and foreign currency revaluation risk.

Interest rate risk

Fluctuations in interest rates may affect the company’s capital availability or cash flow risk as they expose the company to variable cash requirements in relation to debt with floating interest rates. This risk was considered less significant in 2018 given that the company was debt-free.

Credit risk

Lopez Holdings has advances in associated companies but these comprise less than 5% of assets. Trade and other receivables refer to accounts under the FPH Group, which are managed at the FPH level. Lopez Holdings does not offer credit terms for the provision of services as a holding company.

Capital management risk

The company has no material commitments for capital expenditures and has not made any major investments since 2013.

 

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CONTACT US

Lopez Holdings Corporation 
16/F North Tower, Rockwell Business Center Sheridan, Sheridan St. corner United St., 1550 Bgy. Highway Hills, Mandaluyong City, Philippines

  • Trunkline: (632) 8878 0000
  • Fax: (632) 8878 0000 ext 2009