RISK MANAGEMENT

Introduction

Under the ASX Listing Rule 4.10, companies are required to disclose in their Annual Report the extent to which they have followed the best practice recommendations of the ASX Corporate Governance Council.

Corporate governance is the system by which companies are directed and managed. It influences how the objectives of the Company are achieved, how risk is monitored and assessed, and how performance is optimised.

Good corporate governance structures encourage companies to create value and provide accountability and control systems commensurate with the risks involved.

Brainytoys Limited’s Policy

The Board examines and considers areas of significant business risk and implements policy to minimise exposure to these risks.

Areas of risk that are considered at Board Meeting include:

	Asset protection/development	Human Resources
	Performance of activities	The environment
	Organisational behaviour	Continuous disclosure obligations
	Income protection	Minimisation of business risk

The Company Secretary must state in writing to the Board that the company’s financial reports present a true and fair view in all material respects, of the Company’s financial conditions and operational results, and are in accordance with relevant accounting standards. Additionally, the Company Secretary must state in writing that this is based on a sound system for risk management and internal compliance and control that implements the policies adopted by the Board, and is operating efficiently and effectively in all material respects.

Brainytoys Limited Management, on an ongoing basis, reviews all aspects of significant business risk, and makes recommendations to the Board on policies to be implemented and/or changes to be made to the Company’s operations.