Financial Risk Management Practices of JB Hi-Fi Ltd. and Woolworths Group Ltd.

Report on Financial Risk Management
Contents
Introduction:............................................................................................................... 1

Risk Management Framework:................................................................................... 2
Risk Identification:...................................................................................................... 4
Risk Measurement:..................................................................................................... 6
Risk Management:...................................................................................................... 6
Conclusion.................................................................................................................. 7
Introduction:
Report provides insights about the financial risk management practices of two
Australian Stock Exchange (ASX) listed entities. Report focuses on the Risk
management framework, methods of identification of risks, types of risk that the

companies face, measures that are used to identify the risks, etc. The companies
selected for the analysis are:
i. JB Hi-Fi Limited and
ii. Woolworths Group Limited.
Woolworths is in the industry of consumer staple and JB Hi-Fi Ltd is in retail industry,
majorly dealing in electronics equipment.
Woolworths is one of the largest supermarket chains in Australia. The company has
around 995 stores across Australia. The company directly sources most of its fresh
fruits and vegetables and all of its meat requirement from Australian farmers. The
company also provides an option to shop online to its customers, using which,
customers can shop from the comfort of their home, without travelling to the outlet
and the items would be delivered to their homes directly.
The company deals in items such as fruits, vegetables, staples, meat, other FMCG
products.
JB Hi-Fi Ltd. operates under two brands, viz. JB Hi-Fi, which focuses on Tech related
good and consumer electronics, whereas, The Good Guys, which focuses on
appliances for home use and other Consumer Electronics. The company has total
315 stores of its own, in addition to these stores, company also makes sales online
and through other commercial channels. The company operates in Australia and
New Zealand.
The company deals in items such as consumer electronics, such as mobile phones,
accessories, etc home appliances such as refrigerators, televisions, etc.
The image below provides the detail of locations and number of outlets of the
company:

(Reference: JB Hi-Fi Ltd. (2018)
Annual Report 2018. Available at
https://investors.jbhifi.com.au/wp-content/uploads/2019/08/4E_FY19.pdf) (Accessed:
7 September, 2019)
Risk Management Framework:
JB Hi-Fi Ltd. has formed an Audit and Risk management committee, who is made
responsible for overseeing implementation of policies framed by the company,
which aims at ensuring that group’s risks are managed adequately during the
operations of the company.
Group’s risk management framework complies to ISO31000, enabling management
in identification and management of risk. The risk framework of the company is
revised and the same is then presented to the board for approval on annual basis.
The company has a Risk Management Policy which sets out the risk management
framework, defines the responsibilities for various groups, such as Board, ARM
Committee, Management and Group Risk and Assurance function.
The company has a well-defined governance structure, wherein, the company has
“Three lines of defence”, in order to clarify accountabilities for risk management
within the Group. The structure can be well explained using the diagram on the next
page:
The responsibility of reviewing the group’s Risk Management Framework is assigned
to Audit and Risk Management Committee, along with assessing the effectiveness of