2024 Report

The Risk Committee plays a pivotal role in the oversight of risk, establishing risk appetite and tolerances and leading effective monitoring and management of current and emerging risks critical to the Company’s objectives. Proactive risk identification, management, and mitigation remain vital for achieving strategic goals. The Board of Directors maintains overall responsibility for the Company’s risk management strategy, with the Risk Committee ensuring its effective implementation by managing risk tolerance, overseeing monitoring and reporting processes, and embedding risk management practices into operations.

During 2024, the Risk Committee actively monitored geopolitical risks and their macroeconomic implications, with a focus on the Russia-Ukraine conflict, the escalation in the Middle East, rising tensions in China-Taiwan-US relations, and policy shifts following the newly elected US administration and UK Government. The Committee regularly evaluated OCI’s future liquidity and performance by analysing changes in deal flow, exit activity, and expected capital calls under scenarios of sustained inflation and elevated interest rates. These scenarios were concurrently updated to reflect the improved realisations achieved by OCI during the final six months of the year. Cash flows are monitored against expected, stressed, and extreme scenarios.

Despite the challenging global environment, the Company’s portfolio allocation to cost-light and tech-enabled businesses helped offset potential EBITDA and revenue impacts from volatility in interest rates, currencies, and inflation.

Significant progress was made in evaluating lender composition across OCI, Oakley Funds, and portfolio companies. These efforts improved the credit quality of selected banking counterparties and facilitated the refinancing of key debt facilities, resulting in reduced debt servicing costs and maintaining leverage at levels below peers.

The Risk Committee also supported the Board in advancing the capital allocation policy and focused extensively on OCI’s liquidity position under a range of expected and stressed scenarios. Analyses of the ageing of commitments, assets, and liabilities were conducted to reaffirm the Board’s liquidity risk tolerance. This analysis informs capital allocation including size of future commitments, size and utilisation of credit facilities, any return to shareholders through dividend or buyback and the potential use of other capital and liquidity levers.

Operational excellence remained a priority throughout the year. The Risk Committee reviewed the risk register, drove enhancements in the Governance, Risk, and Compliance tool, and expanded the scope of risk assessments to include enhanced ESG reporting, providing the Board with improved visibility into emerging risks and greater oversight of control effectiveness.

Looking ahead, the Risk Committee will continue working closely with the Board to ensure that OCI operates within the established risk tolerance levels. With new government agendas emerging following a year of global elections, the Committee will remain vigilant to potential changes that could affect OCI’s liquidity or portfolio performance.

The focus areas for 2025 include:

Cashflow Management, Capital and Liquidity Tools

The Risk Committee will continue its investment in tools and strategies to enhance oversight of cashflow management, liquidity and consideration of capital levers.

Emerging risks and political uncertainty

Set a proactive approach to understand and manage risks and uncertainties arising from new political agendas, providing the Board with actionable tools to mitigate potential impacts.

Regulatory awareness

Monitor regulatory changes, particularly in jurisdictions where the Oakley group operates, and ensuring compliance with new requirements.

Macroeconomic impacts

Remain vigilant to changes in the macroeconomic environment and their potential impacts on OCI’s investments.

The Chair of the Risk Committee is appointed by the Board of Directors. The role and responsibility of the Chair of the Risk Committee is to set the agenda for meetings of the Risk Committee and, in doing so, takes responsibility for ensuring that the Risk Committee fulfils its duties under its terms of reference.

The Risk Committee met twice during the year, with quarterly reports supplied to the Board as part of the Board’s active monitoring approach.

The Principal risks and uncertainties faced by the Company are described in the Strategic Report. Note 6 to the Consolidated Financial Statements provides detailed explanations of the risks associated with the Company’s investments.

On behalf of the Board.

Richard Lightowler
Chair of the Risk Committee