Annual Corporate Governance Report 2017

37 − INTERNAL AUDIT AND PROCESS CONTROL  Coordinates and manages the risk management and control system.  Regularly reviews identified risks and coordinates risk assessment by the relevant officers.  Designs policies and procedures and identifies new controls.  Verifies application of controls and reports to the Audit and Control Committee. The Audit and Control Committee oversees the functioning of the system, the assessment of new risks, and the information to be disclosed in annual and half-yearly financial statements. The Audit and Control Committee is also the body responsible for reporting to the Board on the risk management and control system so that, as the case may be, it may approve or alter action plans, set in motion new measures to be implemented and oversee assessment of newly identified risks. E.3 Identifying the main risks – including tax risks – that might affect achievement of business aims. The main risks that might affect the achievement of the business aims of the Atresmedia Group can be classified as follows: COMPLIANCE: Compliance risks. These risks arise from regulatory changes in the market domains that affect the industries where the Group operates: mainly, regulatory changes in the audiovisual sector (advertising standards, rules on competition and new entrants, use of the radio spectrum, etc). STRATEGIC: Arising from external factors which may trigger changes in the Company’s aims, such as regulatory changes, shifts in competition, changes in relations with shareholders and investors, changes in financial markets and other factors. The main impact arises from the macro economic and political environment in the markets where the Group operates, chiefly Spain. The performance of the wider economy powerfully shapes the advertising market: the sector depends on the health of the economy as a whole. In addition, we continuously assess and analyse the competition as to number of competitors and their strategies within the segments where the Group operates. The strategic plan, reviewed annually, examines all these risks and sets out action plans to mitigate them. OPERATIONAL  Advertising space sales: the Group has available relevant and updated information with which to analyse changes in demand in the advertising industry, and moves ahead of developments by creating comprehensive communication plans for our clients. We analyse the environment and the audiovisual sector to put in place a marketing strategy that is engaged in an ongoing interaction with the market and with programming goals and content schedules.  Programme production: Production projects are approved and carried out in accordance with a programming strategy that relies on an analysis of expectations, viewership targets and business returns. To minimise the adverse effect of any viewership or business underperformance, we create pilots and carry out viewer and advertiser expectation surveys.  Broadcast rights acquisition: we research general trends and programming forecasts, product suitability, broadcast capacity, estimated viewership, consistency with channel targets, price trends and authorised budgets.  Purchasing and contracting in general: We use a procurement management tool to approve any purchase or expenditure by the Group. A Procurement Committee assesses and authorises any purchases that require oversight and authorisation. FINANCIAL: Financial risk relates to changes in exchange rates, because a significant proportion of broadcast rights purchases take place in foreign currency, chiefly US dollars. The risk is mitigated by exchange rate hedges entered into by the Atresmedia Group. TECHNOLOGICAL: Major technological change is taking place in the TV and film industry. Technological development is increasingly swift and intense, and users’ TV viewing habits are shifting as a result. The Atresmedia Group is making a powerful effort to distribute its content through all available platforms so as to offer our products to all users.