Financial Review

Risk Management and Outlook

Risk affects both performance and long-term plans of any business. Financial risk management on the other hand is the practice of creating economic value in a firm by using financial instruments to manage exposure to risk, particularly credit risk and market risk.

Within Morrison's business segments there are different risks, which are thoroughly discussed inspiring confidence to managers and stakeholders. Morrison's have a comprehensive strategy of how to minimise risk and there are details of how the business will manage the risk although their outlook section is less apparent. The merge with Safeway was clearly risky and this is illustrated in great detail.

Sainsbury's have a section identifying risk, but there is no communication of how the risks will be managed. Brief details of the outlook are given (where growth and capital expenditure are expected) although discussion is fairly brief.

Corporate Governance

Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way in which a corporation is directed, administered, or controlled. It is the process of managing corporate affairs to ensure accountability to relevant stakeholders.

Morrison's provide comprehensive details discussing how they comply to corporate governance although the documentation of such is less clear and decisive. There are details of the board and the roles of committee members on their website.

The committee are responsible for approving the internal audit plan and measuring the effectiveness of the company's internal controls and risk management systems. In addition to this they must review and approve the statements to be included in the Annual Report concerning internal controls and risk management.

In order to help the committee with their duties they will have access to sufficient resources and be provided with appropriate training.

At Sainsbury's the board consists of two Executive Directors and six Non-Executive Directors. There is a clear understanding of the responsibilities between the Chairman, and the Chief Executive. The Non-Executive Directors also bring experience to the board