Risk management and ethics The Board and induction Meetings and time commitment Conclusion Performance appraisal, independence and  re-election performance of the Board was very useful; it  reminded us all that while the Board’s performance  is “very good”, relatively minor and focussed  adjustments, for example in the Group’s strategic  planning processes, can provide a basis for further  performance improvements and enable us to  better utilise the diverse skills and abilities of  individual Board members.  It has been CRH’s practice since the formation of  the Group in the 1970s that the roles of Chairman  and Chief Executive are not combined. A summary  of our respective responsibilities are set out on  page 40. It is also our practice that a majority of the Board  comprises non-executive Directors. My non- executive Director colleagues are expected to  challenge management proposals constructively  and to examine and review management  performance in meeting agreed objectives and  targets. In addition, they are expected to draw on  their experience and knowledge in respect of any  challenges facing the Group and in relation to the  development of proposals on strategy. Ernst Bärtschi and Heather Ann McSharry were  appointed to the Board in late-2011 and  early-2012 respectively. In order to provide them  with an in-depth understanding of the Group,  Kieran McGowan agreed a comprehensive  induction programme with each of them, which  was designed to cover their first year on the Board.  Following my appointment as Chairman, I met with  Ernst and Heather Ann approximately half way  through the programme to ensure that it was  meeting their needs. I would like to thank both of  them and the senior management team for the  time and effort they invested in the programme, the  details of which are set out on page 42. My colleagues and I are committed to ensuring that  the Board is sufficiently diverse and appropriately  balanced, and these are core elements taken into  account by the  Nomination and Corporate  Governance Committee  when it makes  recommendations on Board appointments. The  renewal policy is described in detail on page 41.  Recent appointments have been very much in  keeping with these principles.  I have conducted a formal evaluation of the  performance of individual Directors, which  included training needs where appropriate. I can  confirm that each of the Directors continues to  perform effectively and to demonstrate strong  commitment to the role. Jan Maarten de Jong was appointed a Director in January 2004 and has entered his tenth year on the Board.  Notwithstanding his tenure, we consider him to be  independent. In forming this view, we have taken  into account his performance as a non-executive  Director in terms of the judgement, objectivity and  commitment he brings to the Board. We have  invited him to serve as a Director for a further  period of one year, with the position to be  reviewed in 2014. In accordance with the policy  adopted in 2011, each Director will retire at the  Annual General Meeting on 8 May 2013. I strongly  recommend that each of them be re-elected. I work closely with the Chief Executive and  Company Secretary in setting the agendas of the  Board to ensure that sufficient time is allocated to  strategy setting and review, performance  monitoring, portfolio management, including  acquisitions and divestments, succession  planning and talent management. The papers for scheduled Board meetings are circulated  electronically in the week prior to the meeting. The papers are regarded by the non-executive  Directors as being comprehensive. However,  following the feedback from the external  evaluation process, we have focussed over the  past year on rationalising the documentation  circulated to the Board. Further details in relation  to the agenda items dealt with by the Board  throughout the year are set out on page 43. The Board makes two visits each year to Group  operations; one in Europe and one in North  America. Each visit lasts between three and five  days and incorporates a scheduled Board  meeting. In 2012, these visits were to Belgium in  Europe and to Montreal in Canada. Since my  appointment as Chairman, I have also visited our  joint venture in India and in the coming months I  will be visiting our operations in Ukraine and our  joint venture in China.  Prior to their appointment, potential non-executive  Directors are made aware of the calendar of  meetings and are asked to confirm that they are  able to allocate sufficient time to meet the  expectations of their role. My agreement is required  before a non-executive Director accepts additional  commitments that might impact adversely on the  time he or she is able to devote to CRH.  Risk management continues to be the focus of  much attention in the context of both the  recessionary environment and high profile failures  of risk systems in global organisations. The  principal strategic risks which the Group faces are  set out in the Directors’ Report on pages 68 and  69. The Board has delegated responsibility for the  monitoring of risk management and internal  controls to the  Audit Committee ¹. However, the  Board retains ultimate responsibility for determining  the Group’s “risk appetite” and annually considers  a report in relation to the monitoring, controlling  and reporting of identified risks and uncertainties.  In recent years management has undertaken a  significant review of the Group’s risk management  framework to ensure that the systems in place are  appropriately robust and reflect the organisation  structure and diversity of the Group. The Board  and management are satisfied that appropriate risk  management and internal controls are in place  throughout the Group.  The international regulatory environment in which  the Group operates continues to evolve in the area  of compliance and ethics, with a significant step-up  in enforcement activity around the world. Our  stakeholders demand transparency from us in  terms of business ethics, particularly as we develop  a more diverse, global footprint. The Group’s  policies and procedures are designed to reinforce  our high standards of business conduct and  ensure our employees everywhere act in a manner  consistent with CRH’s core values to safeguard our  excellent reputation. As outlined on page 46, the  Head of Compliance and Ethics reports regularly to  the  Audit Committee . In summary, I believe that your Board operates very  effectively and that the Board’s governance  structures outlined above and in the remainder of  this report are appropriate and robust. As  Chairman, I am focussed on ensuring that CRH  remains at the forefront of best practice in this area.  Nicky Hartery  Chairman February 2013 ¹ In accordance with Section 91(6)(b) of the EC (Directive  2006/43) Regulations 2010 CRH 39