Trustees report and financial statements 2020

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION THE ROYAL SOCIETY TRUSTEES’ REPORT AND FINANCIAL STATEMENTS 46 SCIENCE SHAPING THE WORLD WE LIVE IN 47 Principal risks and uncertainties Council is responsible for ensuring that proper arrangements are in place for risk management. Council relies principally on the Audit Committee, supported by the internal auditors, KPMG LLP, to assess those arrangements and to advise it accordingly. The Audit Committee considers regular reports on risk-management systems and management of major risks. Council considers regular reports from the Audit Committee and reviews management of major risks, including using its own risk register. The risk registers of the Society’s sections are also updated periodically and used in managing and monitoring risks and communicating information about risks across the organisation. Following previous internal audit reviews, a new process for preparing and considering risk registers was launched in the year and aims to reinforce the importance of risk considerations in decision making at all levels of the organisation. Council and senior staff reflect frequently on uncertainties and risks to achieving the Society’s goals and the effectiveness of the various means it employs to mitigate those risks. They are also vigilant in identifying new risks and taking steps to address them. Actions and processes often contribute to mitigation of several risks simultaneously. The Society works assiduously to develop and maintain relationships to ensure that its activities remain relevant, that its contributions are effective and that the value of its work is recognised. The Society enjoys many beneficial relationships through its Fellows, Foreign Members and staff. The risk register was reviewed considering developments in the external landscape, in particular the COVID-19 pandemic. This review identified that all key risks had already been included on the risk register but the likelihood and impact had increased, therefore leading to additional management of the risk being required. The main risks identified by Council and actions taken to manage them, including ongoing actions, are described in the table. Key Status of risk  High risk  Medium risk Only significant risks are presented in the table, therefore none have been rated as low risk Change of status Increased risk No change Decreased risk Key strategic priorities at risk  Promoting excellence in science  Supporting international scientific collaboration  Demonstrating the importance of science to everyone Risk Key strategic priorities at risk Management Status of risk Events adversely impact reputation and operations (cyber attack, serious data security breach, a serious fraud, major health and safety incidents or internal process failures). • Engage senior-level management, committees and Council in policy setting and monitoring. • Regular review and update of information security policies and procedures. • Regular review and update of business continuity and disaster recovery plans to help minimise disruption to operations from unexpected events. The Society’s strategy does not clearly articulate objectives to allow effective prioritisation of work, which means the Society commits to work beyond its resource capacity; therefore, the Society does not deliver against its mission and does not act effectively in its three key roles as a charity, fellowship and national academy of science. • The Society has a system of committees that report to Council and are responsible for key areas of the Society’s work. • Early planning for the formulation of the 2022 – 2027 strategy with increased focus on financial and risk considerations. • Regular meetings of the Officers and regular communication from the Officers to Council. • Specifically during the current pandemic, the Officers actively consider the latest government advice and the impact on the Society’s work programme with reprioritisation and diversion of resources to the areas of the biggest current need. The Society does not ensure the effectiveness of its work, fails to remain relevant and/or address important issues as they arise, and does not ensure that its public benefit is recognised by stakeholders. • New programmes of work are approved by Council, who have oversight over all work at the Society and set the Society’s strategy. • Regular meetings of the Officers and regular communication from the Officers to Council. • Oversight of the Society’s activities by Fellows with relevant experience. • Early planning for the formulation of the 2022 – 2027 strategy to include considerations of ways of demonstrating public benefit effectively. • Effective project initiation and project management processes. • Specifically during the pandemic, engagement with Fellows and peers to enable participation in initiatives to support scientific analysis and provide scientific advice to the government. Trading subsidiary, Royal Society Trading Limited, fails to contribute funds to support research and/or carry out activities to further the Society’s objectives. • Implement the decision of Council to progress with a sale of Chicheley Hall. • Continue to take advice from relevant professionals and follow recommended steps. Political developments in major international science partners, or between UK and major international science partners, have negative impacts on the UK science system. This could lead to funding cuts to foreign partners or their withdrawal from international agreements and collaboration arrangements and a drop in foreign applications for Royal Society grant awards. • Continue to work with many partners, in the UK, the rest of Europe and globally. • Advocate and promote future arrangements for international collaboration, and the ability of the UK to continue to attract outstanding scientists from overseas, funding for UK science and regulatory matters. • Provide advice and build relationships.