Risk Management

Below are extracts from the Corporate Governance section of the Annual Report of Rotork plc 2010:

A continuous process for identifying, evaluating and managing the significant risks faced by the Group continued to be applied and developed during the year under review and operated up to the date of approval of the Annual Report & Accounts.

Senior managers with responsibility across all functions participate in the risk management process on a regular basis. During this process key risks already identified are re-evaluated and new key risks facing the Group's businesses are identified and evaluated. Their deliberations are reported to the Audit Committee and Board by the Group Finance Director who is responsible for the risk management matrix. The process is based on senior managers' detailed knowledge and understanding of key risks within and external to the business, based on formal management information and reports and their interaction and daily dealings with these reporting directly to them, their colleagues and external parties.

The process includes separate exercises to identify and evaluate key risks at divisional level by each Divisional Board. These divisional key risks are then collated and considered for Group materiality. They are then evaluated formally at a Group risk review exercise attended by members of the Divisional Boards and the Rotork Management Board. The non-executive directors are also invited to attend. The output of that meeting identifies risks with weightings for likelihood and Group impact. The principal risks and uncertainties facing the Group are commented on in the Business Review section of this Annual Report & Accounts.

Internal financial audits are undertaken on a regular basis by a selected group of accountants drawn from head office and across the divisional businesses and geographic centres. All these accountants participate in a training programme which covers internal audit, best practice and control procedures.