## 3. Significant accounting policies (continued): 

Effective January 1, 2013, the Corporation adopted IFRS 10, 11, 12 and 13. These new standards do not affect the recognition or measurement of any items in the Corporation’s Financial Statements. Disclosure requirements under IFRS 13 have been provided in Note 4. There have been no other changes to the Corporation's accounting policies from those disclosed in the consolidated Financial Statements of the Corporation for the years ended December 31, 2012 and 2011. 

## 4. FINANCIAL RISK MANAGEMENT 

## Overview 

The Corporation has exposure to the following risks from its use of financial instruments: 

 credit risk and other price risk 

 liquidity risk 

 market risk 

 foreign exchange risk 

This note presents information about the Corporation’s exposure to each of the above risks, the Corporation’s objectives, policies and processes for measuring and managing risk, and the Corporation’s management of capital. Further quantitative disclosures are included throughout these consolidated financial statements. 

## Risk Management Framework 

The Board of Directors has overall responsibility for the establishment and oversight of the Corporation’s risk management framework. The Board has established the Risk Management Committee, which is responsible for developing and monitoring the Corporation’s risk management policies. The committee reports regularly to the Board of Directors on its activities. 

The Corporation’s risk management policies are established to identify and analyse the risks faced by the Corporation, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Corporation’s activities. The Corporation, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. 

The Corporation’s Audit Committee oversees how management monitors compliance with the Corporation’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Corporation. The Audit Committee undertakes both regular and ad hoc  reviews of risk management controls and procedures. 

## Credit Risk and Other Price Risk 

Credit risk is the risk of financial loss to the Corporation if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Corporation’s investments. Concentrations of credit risk exist when a significant proportion of the Corporation’s assets are invested in a small number of individually significant investments, and investments with similar characteristics and/or subject to similar economic, political and other conditions that may prevail. The Corporation’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographics of the Corporation’s customer base, including the default risk of the industry and country in which customers operate, as these factors may have an influence on credit risk. No single partner accounted for more than 20% of the Corporation’s revenue in the year ended December 31, 2013. 

Other price risk is the risk that future cash flows associated with portfolio investments will fluctuate. Cash flow from investments is generally based on a percentage of the investments’ gross revenue, same store sales, gross margin or other similar revenue. Accordingly, to the extent that the financial performance of the investment declines in respect of the relevant performance metric, cash payments to the Corporation will decline. Portfolio investment agreements allow for the repayment of investments at the option of the portfolio entity, and such repayment could affect future cash flows. 

The Corporation is exposed to credit related losses on current and future amounts receivable pursuant to investment agreements. In the event of non-performance by Partners, future royalty and distribution revenue from the investments could be reduced, resulting in impairment of investment values. The investment agreements provide that payments are receivable monthly no later than the last day of the month. 

