Consolidated Financial Statements and Consolidated Management ...

4. Control systems for regulatory risk
This group includes all risks associated with legislation that could affect the Company’s business, relating to drafting contracts (clients and suppliers),
compliance with legal, administrative, international, state, regional or municipal regulations, as well as renewal of rental and management agreements.
An approval procedure linking different levels within the organisation is in place, which ensures the correct approval of contracts. Furthermore, all risks
affecting this sector are periodically reviewed by the Internal Audit Department as part of its annual planning.
The company can also rely on subcontracted companies which ensure compliance with occupational health and safety, security at facilities, fire fighting, etc.
As part of the company’s procedures, each centre has an obligatory file which must report all agreements entered into with third parties, duly updated
and signed.
5. Other preventive procedures
5.1 Regarding occupational health and safety
The occupational health and safety plans involve planning processes that are susceptible to causing risks and establishing the appropriate safety
measures.
The Company organises numerous training courses for employees and subcontractors.
5.2 Insurance
The NH Hoteles Group follows a policy of having wide-ranging coverage by taking out insurance policies for risks. In addition, ongoing reviews are
conducted on such coverage.
D.2. State whether any of the different types of risk (operational, technological, financial, legal, reputational, tax…) that affect the company
and/or its group have materialised during the year:
If so, indicate the circumstances that caused them and whether the control systems established worked.
Risk arising during the year
The risks inherent in the activity
Circumstances that caused it
The activities of NH Hoteles, S.A.
YES
Functioning of the control systems
The risk control and prevention systems have been shown to function effectively, and so to date the resources employed are considered to have worked
satisfactorily.
Risk arising during the year
Financial risks
Circumstances that caused it
Financial crisis, falling sales, impaired results.
Functioning of the control systems
The company is involved in a refinancing process which it expects to conclude in the first quarter of 2012.
D.3. State whether there is a committee or other governing body responsible for establishing and supervising these control mechanisms.
If so, describe its functions.
Name of the committee or body
Audit and Control Committee
YES
Description of functions
The Audit Committee, reporting directly to the Board of Directors, is responsible for supervising the correct functioning of all the Group’s internal control
systems. It also periodically analyses the principal risks associated with the business and the systems established to manage and control these risks. It is
also the body responsible for relations with the external auditors of the Group.
In general, the Audit Committee supports the Board of Directors in its supervisory duties, using all of the powers granted to it by the Spanish Public Limited
Companies Act (LSA), the Company’s bylaws, and the Regulations of the Board of Directors in relation to audit and control.
Name of the committee or body
Internal Audit Department.
Description of functions
Identification and evaluation of risk situations; definition of an annual audit plan aimed, among other things, at verifying correct application of established
rules and procedures, both at the level of corporate departments and in different hotels.
D.4. Identification and description of the processes of compliance with the various regulations that affect the company and/or its group.
Occupational Risk Prevention Department
The occupational risk prevention systems are subject to a continuous process of evaluation and internal audit. The scope covers central services as well as
the various hotels.
Internal Audit
The Internal Audit Department, reporting directly to the Chairman and answerable to the Board of Directors through the Audit and Control Committee,
helps manage the risks that the Group encounters in reaching its objectives..
38
ANNUAL CORPORATE GOVERNANCE REPORT