Risk Management

DAVID JONES LIMITED ABN 75 000 074 573

RISK MANAGEMENT AND

INTERNAL COMPLIANCE

AND CONTROLS SYSTEMS

POLICY

ADOPTED BY THE BOARD ON 23 SEPTEMBER 2004

DAVID JONES LIMITED ABN 75 000 074 573

OCTOBER 2004

DAVID JONES LIMITED ABN 000 074 573

PAGE 2

RISK MANAGEMENT AND INTERNAL COMPLIANCE AND

CONTROLS SYSTEMS POLICY

1.1

David Jones seeks to take and manage risk in ways that will generate and protect

shareholder value. For David Jones, the management of risk is a continual

process and an integral part of business management and corporate governance.

The Company approach to risk management is to define opportunities as well as

to avoid loss. David Jones’ risk management strategy is aligned with our

corporate strategy and Company vision, to ensure that the risk management

strategy contributes to David Jones’ corporate goals and objectives.

1.2

The David Jones risk management program has been designed to establish a

sound system of risk oversight and management and internal controls by having

the framework in place to identify, assess, monitor and manage risk. The David

Jones risk management methodology has been developed in line with the

Australia/New Zealand Risk Management Standard (AS/NZ 4360). The program

and methodology seek to promote awareness of risks and intelligent risk taking

and management in, and among, all levels of the business.

1.3

The David Jones Board determines the Company’s risk appetite, or tolerance for

risk, after taking into account the Company’s strategic objectives and other

factors including shareholder expectations, financial and capital requirements and

the Company’s financial position, organisational culture and the Company’s

experience or demonstrated capacity in managing risks.

1.4

The Board is responsible for ensuring material risks facing the Company have

been identified and that appropriate and adequate control, monitoring and

reporting mechanisms are in place. Management is...