VECTOR ANNUAL REPORT 2021 /
Governance report
being directors of Vector. Only Committee members attend Committee meetings unless an invitation is extended to other directors, the Group Chief Executive, management and/or other guests. External auditor The role of the external auditor is to audit the financial statements of the company in accordance with applicable auditing standards in New Zealand and to report on its findings to the Board and shareholders of the company. The effectiveness, performance and independence of the external auditor is reviewed annually by the Audit Committee. The Board, after considering the recommendations of the Audit Committee, considers and reviews the appointment of external auditors. The Board requires the rotation of the audit partner for the statutory audit after no more than five years. The company’s external auditor is KPMG. Graeme Edwards has been the Audit Partner since 2019 and Laura Youdan has been the Assurance Partner since 2018. All services provided by KPMG are considered on a case-by-case basis by the Audit Committee to ensure there is no actual or perceived threat to independence in accordance with the policy. The Audit Partner and Assurance Partner have provided the Audit Committee with written confirmation that, in their view, they were able to operate independently during the year.
KPMG has provided the Board with the required independence declaration for the financial year ended 30 June 2021. The Audit Committee has determined that there are no matters that have affected the auditor’s independence. It is the Board’s policy that all non-audit services proposed to be undertaken by the external auditor must be pre- approved by the Audit Committee. The Audit Committee considered and gave its approval for the auditor to undertake certain non-audit related matters. Fees paid to KPMG are included in Note 8 of the notes to the financial statements on page 62 of the annual report. KPMG was paid $1.2m for audit related services in the financial year to 30 June 2021. KPMG did not provide any non- audit related services. Non-audit work did not exceed 25% of the amount paid for audit work. Further detail is provided on page 62 of this annual report. The auditor is regularly invited to meet with the Audit Committee including without Management present. The auditor has been invited to attend the Annual Shareholders’ Meeting and will be available to answer questions about the audit process and the independence of the auditor. Risk management At Vector, we recognise that rigorous risk and opportunity management is essential for corporate stability and performance, and supports us in our
pursuit to create a new energy future. To drive sustainable growth and ensure business resilience, we must anticipate risks to our operations while capitalising on opportunities as they arise. Vector’s enterprise risk management (ERM) framework provides a flexible and purpose-built approach to the application of risk management across Vector and is consistent with the Australian/New Zealand Risk Management Standard “AS/NZS ISO 31000:2018 Risk management – Principles and Guideline”. Our risk management processes and tools are embedded within our business operations to drive consistent, effective and accountable decision-making. Consistent with the “Three Lines of Defence” principle, all Vector people are responsible for applying Vector’s ERM framework within their individual roles to proactively identify, analyse, escalate and treat risks. This risk mindset has been implemented through: ‒ awareness of risk management’s value at operational, Executive and Board level; ‒ relatable and easily applied risk management policies, processes and tools; ‒ integration of specialised risk partners throughout the business; and ‒ continuous training and education, both formal and informal.
Our key and emerging risks
Strategic Risks
1 Adverse impacts, government responses, and unexploited opportunities from climate change 2 Failure to adapt to economic, financial, environmental, customer and/or social changes to maximise opportunity and value 3 Uncertain, adverse or underutilised legislative, policy or regulatory settings in all operating jurisdictions 4 Reputational damage / loss of trust & confidence with key stakeholders 5 Electricity network fails to adapt and transition to changing demand, affordability & regulatory policy causing inefficient capital spend and reliability challenges 6 Rapid digitalisation and technology change 7 Funding, liquidity, cashflow and credit risk due to uncertain economic conditions and market risks
Operational Risks
8 9
Serious harm or fatality event, including mental health & wellbeing
Major/repeated disruption of critical services
10 Cyber security compromise 11 External shock event, including natural disaster and response to the Covid-19 pandemic 12 Breach of SAIDI & SAIFI 13 Failure or poor performance of critical third parties (including service providers, suppliers and partnerships) 14 Failure to collect, protect or create value from information 15 Inability to develop, retain and recruit talent
Emerging Risks
16 Gas businesses adversely impacted by changing climate change policy and regulation
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