The Board of Directors provides oversight of the financial, operational, legal and other business risks to the Company on an ongoing basis. The Company faces a number of risks, including economic, climate related, financial, cybersecurity, legal and regulatory risks and others.
The Company’s leadership team is responsible for the day-to-day management of risks, while the Board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the Board is responsible for satisfying itself that the Company’s risk management processes are adequate and functioning as designed.
While the Board is ultimately responsible for risk oversight, the Audit Committee has primary responsibility for the financial, legal, climate related, cybersecurity and other operational risks, and the Compensation Committee assesses the risks associated with compensation practices. Each of the committees of the Board routinely reports to the full Board on material issues considered by such committee, which may include issues of risk.
A risk is considered to have a substantive financial impact within Mohawk when it could have a material adverse effect on the Company’s business, financial condition, reputation and results of operations. Once substantive risks are identified, they are assessed in a heatmap in order to aggregate risk assessment results for evaluation and to determine the average impact, likelihood, and velocity as well as risk tolerance and response planning.
Based on the results of the risk assessment process, corporate finance personnel manage risks in areas such as treasury, insurance, public reporting and audit, while legal department personnel evaluate and advise on legal risk mitigation. Operating units are responsible for risk assessment within their respective businesses, with oversight from corporate administrative and executive teams. The process for identifying, assessing, and responding to climate-related risks and opportunities is business segment specific rather than Company-wide, because each business segment operates separately while reporting to the President and COO to be included in the overall business strategy.