01 02 03 Financial Statements 04 38. Capital management continued Changes in liabilities arising from financing activities continued Debt securitiesFinance lease Borrowings issued liabilities Total 1 January 2017 187,557 36,024 14,878 238,459 Proceeds from debt securities issue, net of transaction costs – 89,01 1 – 89,011 Repurchase of debt securities – (34,197) – (34,197) Proceeds from borrowings 217,121 – – 217,121 Repayment of borrowings (139,343) – – (139,343) Purchase of leased property – – (5,812) (5,812) Interest accrual/(payment) 3,603 4,483 (45) 8,041 Foreign exchange (gain)/loss (1,928) (1,828) (187) (3,943) 31 December 2017 267,010 93,493 8,834 369,337 39. Risk management Introduction Risk is inherent in the Group’s activities, but it is managed through a process of ongoing identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Group’s continuing profitability and each individual within the Group is accountable for the risk exposues relatigto s or her resposibilites. The Goup is exposed to isurance risk, credit risk, liqudity risk and market risk. It is also subject to operational risks. The independent risk control process does not include business risks such as changes in the environment, technology and industry. They are monitored through the Group’s strategic planning process. Board of Directors The Board is responsible to shareholders for creating and delivering sustainable shareholder value through the management of the Group’s businesses. Among our responsibilities are setting and overseeing the execution of the Group’s strategy within a framework of effective risk management and internal controls, demonstrating ethical leadership and upholding best practice corporate governance. The Board is comprised of nine Directors, six of whom are Independent Non-Executive Directors. Each of the Chairman, CEO and Non-Executive Directors has clearly defined roles within our Board structure. Audit Committee The Audit Committee has overall responsibility for implementing principles, frameworks, policies and limits in accordance with the Group’s risk management strategy related to the general control environment, manual and application controls, risks of intentional or unintentional misstatements, risk of fraud or misappropriation of assets, information security, information technology risks, etc. The Audit Committee facilitates the activities of the internal audit and external auditors of the Group. The Audit Committee is elected and directly monitored by the independent members of the Board. Risk measurement and reporting systems The Group’s risks are measured using a method which reflects both the expected loss likely to arise in normal circumstances and unexpected losses, which are an estimate of the ultimate actual loss based on different forecasting models. The models make use of probabilities derived from historical experience, adjusted to reflect the economic environment. The Group runs three different basic scenarios, of which one is the Base Case (forecast under normal business conditions) and the other two are the Troubled and Distressed Scenarios, which are worse and the worst-case scenarios, respectively, that would arise in the event that extreme events that are unlikely to occur do, in fact, occur. Monitoring and controlling risks is primarily performed based on limits established by the Group. These limits reflect the business strategy and market environment of the Group as ell as the level of risk that the Groups willing to accept, with additional e pass on selected dustries. In addition, the Group monitors and measures the overall risk-bearing capacity in relation to the aggregate risk exposure across all risks types and activities. Information compiled from all the businesses is examined and processed in order to analyse, control and identify early risks. This information is presented and explained to the Management Board and the head of each business division. The reports include aggregate receivables exposures and credit exposures, their limits, exceptions to those limits, insurance contract liability positions and their limits, liquidity ratios and liquidity limits, market risk ratios and their limits, and changes to the risk profile. Senior management assesses the appropriateness of the levels of liquidity, credit positions, receivables positions and allowance for impairment on a monthly basis. The Management Board receives a comprehensive risk report once a month. These reports are designed to provide all the necessary information to assess and conclude on the risks of the Group. Risk mitigation As part of its overall risk management, the Group uses derivatives and other instruments to manage exposures to net currency position, insurance liabilities risks, interest rates and credit risks. The Group actively uses a collective financial responsibility approach to individual healthcare customers arising from the provision of healthcare services to out-of-pocket customers, to manage the respective individual debtors arising from healthcare services falling out of the scope of the UHC. 165