REVIEW OF FINANCIAL CONDITION (CONTINUED) Dividend Reinvestment Plan DIRECTORS’ REPORT CONT. Treasury Policies Risk Management and Compliance There were no dividends declared or paid during the three months to 31 March 2013 and therefore the Company’s Dividend Reinvestment Plan  (DRP) was inactive throughout the period.  Interest rates: Management’s policies for determining the mix of fixed and floating interest rates are influenced by the undertakings within the  banking facilities that stipulate a minimum 50% of the total term debt facilities must be hedged in relation to interest rate movements.  Foreign currency: The Company undertakes forward sales in its Wholesale Beef Group in foreign currency, primarily the US dollar and Japanese  yen. All committed forward sales are hedged with foreign exchange contracts to coincide with the expected receipt of foreign funds spread over the  year.  The Company commenced application of hedge accounting principles for interest rate swaps during 2011. The Board has ultimate responsibility for the oversight of risk management and compliance across the Company.  Risk is an integral part of the Company’s decision making process and all risks and opportunities are adequately and appropriately assessed, to  ensure that unreasonable risk exposures are minimised. The Company’s risk and compliance frameworks ensure that all risks and compliance  obligations are properly identified and managed, that insurances are adequate and that processes are in place to ensure compliance with  regulatory requirements.  The Managing Director/Chief Executive Officer is accountable to the Board for the development and management of the Company’s risk and  compliance frameworks and is supported by the Chief Risk Officer, Chief Financial Officer and Company Secretary/General Counsel in terms of  adopting appropriate risk management and compliance processes, including regular and transparent reporting to the Board. Each General Manager  is responsible for the management of risk and compliance with relevant laws and regulations.  The key risks identified in the Company’s Enterprise Risk Register are addressed through the risk and compliance frameworks, reducing risk  exposure to key stakeholders.  The Company’s risk and compliance frameworks are based on the following process:  The Board approved Risk Management Framework includes the following elements: The Company faces a number of risks during the operation of the business. A sample of key risks faced by the company include:  Workplace Health and Safety – given the physical and often remote nature of the Company’s operations and interaction with animals,  workplace health and safety is of paramount importance to the Company. Significant effort and attention has been placed on internal policies  and processes to ensure that employees are aware of their legal obligations and the productivity benefits that come from working safely. A tone of safety first is set at the top of the organization and is reinforced through the commitment of resources to a dedicated safety team and appointment of site safety coordinators for each location. The Board approved Risk Management Policy (published on the Company’s website);  The consolidated Enterprise Risk Register, detailing key Strategic, Operational, Financial, Commercial & Asset Continuity, Legal & Compliance  and People & Culture Risk Factors; and The Board Risk & Compliance Committee.  Performance against the Operating Plan is reported to the Board on a monthly basis. This report provides the Board with the basis to assess  if the Company’s strategy is being executed effectively and allows the Board to assess management’s performance against objectives on a  regular basis. A Compliance Report informs the Board of any regulatory, legal or compliance related issues.  Key Performance Indicators for the Managing Director/Chief Executive Officer and other key senior executives upon which they are rewarded  are limited to the Company’s objectives.   An Operating Plan is developed each year to translate the Company’s long-term strategy into key operational objectives for the following twelve  month period.  As part of the Company’s annual strategic planning process, the Risk Management Policy is reviewed and submitted to the Board for approval.  The Enterprise Risk Register is reviewed and tested in line with changes to the Company’s strategy by the Board and senior executive team.  Board approval of a Strategic Plan, which encompasses the Company’s vision and strategic goals, designed to meet the needs of stakeholders. 20 Australian Agricultural Company Limited