In addition, Sodexo maintains compulsory insurance as legally required in the countries where it operates.
Retained or self-insured risks correspond to the deductibles specified in the insurance programs contracted by Sodexo. They consist for the most part of frequency risks (i.e., risks that occur regularly) but from time to time may also include intensity risks (i.e., risks representing substantial amounts). In some countries, these retained risks correspond to deductibles under employer’s liability, workers compensation, third-party automobile and property insurance. Deductibles range from 5,000 U.S. dollars to 5 million U.S. dollars per occurrence. Sodexo also self-insures frequency risks and low amplitude risks through two captive insurance companies. The American company, incorporated in the State of Hawaii, manages the deductibles of the Workers’ Compensation, Automobile Liability and General Liability insurance program as well as reinsurance on the General Liability. The Irish company, based in Dublin, provides:
The maximum exposure of our captives on a single risk amounts to 10 million U.S. dollars per claim and in aggregate per year.
On the occasion of its most recent policy renewals, Sodexo maintained the scope and level of its coverage, as regards in particular, general liability insurance and professional liability insurance, especially for risks associated with Facilities Management activities.
The total cost of the main insurance programs and self-insured risks (excluding workers’ compensation) of fully-consolidated Group companies, represents around 0.25% of consolidated revenue.
The risk management and internal control approach applied within the Group consists of:
The internal control process is facilitated by a network of local internal control managers and coordinators embedded in the business, supported by a small central internal control team. Their role is to:
A very large number of Group entities prepare a detailed report (Company Level Control Report) on their control environment based on the five components of the reference framework and which includes an evaluation of the subsidiary’s principal risks, a description of risk management measures and an assessment of their effectiveness.
The most significant Group entities go beyond this initial phase, and evaluate the effectiveness of additional controls determined by their own risk assessment (Process Level Controls). Some of these controls are also subject to effectiveness tests performed by independent persons (Group Internal Auditors).
An executive summary of the status of internal controls and the progress achieved is submitted to the Audit Committee at the end of the fiscal year.
Group Finance is responsible for ensuring the reliability of financial and accounting information.
A process is in place to produce and analyze financial information at both operational sites and in the Group and local Finance teams.
Local Finance teams produce a monthly cumulative income statement starting at the beginning of the fiscal year, a balance sheet, and a statement of cash flows. They also regularly produce projections for the full year. Financial statements are consolidated on a monthly basis by Group Finance.
At the half-year, the external auditors conduct a limited review of the interim financial statements.
At the end of the fiscal year, the Chief Executive Officers and Chief Financial Officers of the segments and regions certify the reliability of their financial statements, prepared in accordance with IFRS standards. The external auditors of the main entities express a view on these financial statements in accordance with their mandate from Sodexo’s shareholders. Group Finance monitors changes to IFRS standards and interpretations and ensures that the accounting treatments applied by all entities are compliant with Group rules.
