Commercial & Financial |
Risk: Product failure |
Trend No change Link to strategy · Target returns and leverage · Entrepreneurial culture |
Description and potential impact The Group operates in infrastructure markets where it is critical that its products meet legislative requirements and where the consequences of product failure are potentially serious. Significant product failure arising from component defects or warranty issues may require remediation including the replacement of defective components or complete products, resulting in direct financial costs to the Group and/or wider reputational risk. |
Mitigation Products tested, approved and accredited by regulatory bodies. Quality control protocols fully implemented and continuously monitored. Contractual controls in place to minimise economic impacts. Insurance cover maintained globally with insurance partners. Litigation supported/managed by external legal specialists. |
Risk: Contractual arrangements |
Trend No change Link to strategy · Target returns and leverage · Entrepreneurial culture |
Description and potential impact The Group delivers its commitments to its customers through a variety of contractual arrangements of both a short and medium term nature. Weaknesses in the contract tendering process, inappropriate pricing, misalignment of contract terms, ineffective contract management or failure to comply with contractual conditions could result in loss of revenues, pressure on operating margins and wider reputational damage to the Group. |
Mitigation Group material contract review process implemented ensuring specialist central oversight of key contractual arrangements. Contracts training provided to all relevant employees during the current and prior year. Dedicated quantity surveyors and contracts managers embedded in subsidiary management structures to control projects. Litigation supported/managed by external legal specialists. |
Operational |
Risk: Supply chain deficiency |
Trend Slightly higher Link to strategy · Target returns and leverage · Entrepreneurial culture |
Description and potential impact The Group's businesses depend on the availability and timely delivery of raw materials and purchased components, which could be affected by disruption in its supply chain. Supply chain failures as a result of performance, cost, quality and/or insolvency may have an adverse impact on the Group's production capacity and lead to an inability to meet customer requirements, resulting in reduction in revenues, potential loss of market share and possible reputational damage. |
Mitigation Implementation of Group procurement standards, including robust due diligence of supply chain partners and requiring dual sourcing where available. Maintenance of relationships with key suppliers through regular interaction and assessment of performance/ financial status. Central oversight of material procurement contracts ensuring robust contractual protections. |
Risk: Weaknesses in IT systems |
Trend No change Link to strategy · Target returns and leverage |
Description and potential impact The Group relies on the information technology systems used in the daily operations of its subsidiaries. A failure or impairment of those systems or any inability to effectively implement new systems could cause a loss of business and/or damage to the reputation of the Group, together with significant remedial costs. |
Mitigation Group IT Steering Committee established to review IT systems capability, suitability and integrity. Steering Committee assesses, approves and monitors significant IT change programmes. Disaster recovery plans documented, tested and monitored by Group businesses. The Group's Policy Manual incorporates IT policies in respect of system back-up procedures and hardware/software protection. |
Risk: Ineffective management of acquisitions |
Trend Slightly higher Link to strategy · Portfolio management · Geographic diversification · Target returns and leverage |
Description and potential impact The Group's growth strategies include the acquisition of businesses around the world that complement or supplement its existing activities. Failure to execute an effective acquisition and integration programme would have a significant impact on the Group's ability to generate long term value growth for shareholders. |
Mitigation Board approval required for Group acquisitions, in line with the Group's delegation of authority structure. Due diligence protocols deployed in relation to assessment of target businesses, including financial, commercial, legal and others where appropriate. Contractual protections and assurances sought from sellers to mitigate subsequent identification of risks. '100 Day' post-acquisition integration plan established for all material acquisitions with regular performance monitoring and reporting to the Board. |
Risk: Insufficient investment in product development and innovation |
Trend No change Link to strategy · Portfolio management · Geographic diversification · Target returns and leverage · Entrepreneurial culture |
Description and potential impact The Group operates in global infrastructure markets where continuous innovation is integral to the Group's product offering and where a failure to innovate could result in product obsolescence, the entry of new competitors and/or loss of market share. The development of new products and technologies carries risk including failure to develop a commercially viable offering within an acceptable timeframe. |
Mitigation Subsidiary discretion to engage in research and development activities. Robust quality controls. Dedicated quality compliance resources in place across Group businesses, ensuring responsiveness to regulator and/or customer approval requirements. Executive Board approval of product development proposals within the Group's capital spend approval policies. Board monitoring of emerging risks alongside external specialist support, where both the risks identified and the potential opportunities arising are considered. |
Human Resources |
Risk: Loss of key employees |
Trend No change Link to strategy · Geographic diversification · Entrepreneurial culture |
Description and potential impact The Group encourages an entrepreneurial culture through a decentralised management structure. An inability to attract, develop and retain high-quality individuals in key management positions could severely affect the long term success of the Group. |
Mitigation Development and implementation of a succession planning model driven by the Group Chief Executive. Implementation of contractual protections and retentions in employment contracts of senior management and other key employees. Competitive remuneration, benefits and incentive plans offered to employees and regularly benchmarked. Recruitment process developed to include competency requirements and skills gap analysis. Group policies supporting the training and development of employees. Regular interaction between Group and local executive management, including attendance at subsidiary Board meetings. |
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