Managing risks

All organizations face a variety of internal and external risks at both strategic and operational levels, some of which may be beyond their immediate control. Each risk has a certain likelihood of occurrence and a greater or lesser impact, so for any particular risk there may be impacts on people, equipment/property, the environment, image and/or business. Novartis aims to systematically identify and assess these risks.

We manage all known risks proactively by implementing appropriate preventive and contingency measures. This risk management process is designed to reduce the residual risk of an event – in terms of its likelihood of occurrence and the severity of its consequences – to an acceptable level. The two most important tools for HSE risk performance management are risk portfolios and audits. In addition, for business related risks, a Business Continuity Management (BCM) process is implemented as an integral part of the Novartis risk management framework.

The Business Continuity Management (BCM)

Risk portfolios

The HSE & BCM risk portfolios are based on a bottom-up approach. Since 1997, Novartis sites have developed annual local risk portfolios that are consolidated at Business Unit/Division level, and finally at Group level, into corporate HSE & BCM risk portfolios. They are presented to the Group Executive Committee (ECN) annually. We are making good progress – as demonstrated by the fact that a significant number of risks could be removed from the 2007 Group Risk Portfolio. Action plans for the remaining risks have been developed and are currently being implemented.

HSE audits

Beyond having a control function, Health, Safety and Environment (HSE) audits serve to provide consultancy and support to the Novartis sites being audited. The sites develop action programs based on the audits. Their implementation is controlled by the Divisions and Business Units, and reviewed annually at corporate level.

Emergency
Management

Business
continuity

Management
structure

The Novartis Policy on Corporate Citizenship clearly states that the health and safety of employees, neighbors, customers, consumers and all others affected by our business activities have priority in all our actions. To live up to this promise, even in the event of an emergency, a major element of our risk management strategy is the Novartis Emergency Management (NEM) system. NEM is a compulsory, uniform system that ensures internal emergency reporting and decision-making structures and procedures throughout the whole Group.

To enhance preparedness, Novartis has developed a unique tool, the NEMplan, to support teams in dealing with emergencies, and to ensure adequate and efficient responses. NEM teams on all levels are required to maintain their readiness and skills by the means of training and drills. As part of the overall global process, prepared NEMplans covering dedicated scenarios are made available to the teams.

The NEM system ensures that we are fully prepared for various emergency scenarios, and will allow us to further enhance sustainability through professional risk management.