Statement of Principal Risks and Uncertainties

Risk and Impact Mitigation/Controls

1. Strategic

The Group strategy does not deliver sustainable business growth and profits.

2. Business continuity

The Group depends on the continued availability and integrity of its computer systems together with a number of stakeholders to ensure continuation of the business. Any prolonged interruption caused by key suppliers, political unrest or systems interruption could affect the trade of a business unit.

Covid-19 still has the power to disrupt the global and regional economies as differing regions continue to deal with the pandemic in different ways.

Novel viruses may appear in the future that could lead to similar disruption to the Covid-19 pandemic and to significant disruption within either the specific territories or the entire globe if governments and health authorities feel the need to bring in similar controls to reduce the impact of any outbreak.

3. People

Making sure that we retain and attract the required talent to sustain and improve the business. In particular, tight global markets for specific talent may impact on the availability of suitable candidates to support the growth of the business.

The Board reviews business strategy, annual budgets and longer-term financial plans regularly to ensure the business has the resources it needs.

The Board spends significant time formulating, reviewing and communicating strategy to ensure that our approach delivers sustainable returns. The governance of the business is reviewed, with management teams continuously strengthened and developed.

We also look for opportunities to acquire businesses and talent that will help deliver our strategy.

The Group has developed business continuity, disaster recovery and crisis plans which it continues to appraise, test and refine. A senior executive is responsible for the IT systems, with a suitably qualified team, ensuring that systems and the IT environment remain resilient.

The Group has taken the lessons from the global pandemic and this will help to inform our response should another arise.

Group management continues to monitor the situation with Covid-19 and the impacts it still has on some parts of the globe, and works to ensure it is not disruptive to supply chains. Group management also works with local governments and agencies to protect our employees’ wellbeing.

Risk and Impact Mitigation/Controls

4. Financial

Failure of the business to deliver the cash flows forecasted; inherent currency and inflationary risks and management of those risks; requirements for further funding for the pension fund; customer and supplier credit risk; losses arising from fraudulent or dishonest activity.

Inflation is driving pressures on margins across the world, with pressures on commodity and other input costs. Central bank and government decisions made in efforts to reduce inflation may impact on demand and increase financing costs.

Treasury strategy is defined in the annual accounts and we have written supporting policies and procedures.

Management reviews cash flow regularly to ensure the business has access to the funds it requires to continue with its operations.

The Group has regular contact with its lenders to ensure adequate medium-term financing to support its business operations for the foreseeable future. Loan covenants are regularly monitored.

Hedging activity is used to mitigate exposure to currency exchanges.

Within the budgeting process, increases in input prices due to inflation are modelled through to the sale prices offered to our customers.

The Group reviews options for the actions it can take to mitigate its long-term pension risk and consults professional advisers as necessary.

There is a whistleblowing policy in place enabling employees to bring attention to fraudulent or dishonest activity.

5. Product design

The success of the Group depends on providing high-quality products that meet our customers’ needs.

There are always inherent risks in the introduction of new technologies and the entry into new markets.

Executive Directors and senior management continually review product development programmes to ensure, as far as possible, that they will successfully meet business objectives and customer requirements. There is ongoing investment in designing and building innovative and sustainable products, applications and services for the Group's markets.

The business has robust policies and procedures in place for recruiting individuals. The retention of key employees is important for long-term stability and success. Training and mentoring are provided for employees to ensure they can both fulfil their potential and support business success. Training provision is assessed and developed to align with employee development and business requirement.

We have a well-defined and published set of values and information on how this supports our wider company culture, to make it an attractive place for people to work.

Performance reviews are held regularly to identify development needs and career opportunities aligned to business needs.

We undertake workforce and succession planning to ensure that the right individuals are in the right roles.

6. IT systems and cyber security

A third party may seek to disrupt business through either external attacks to our systems, or seek to steal IP or sensitive data from us.

Significant prolonged outages of core systems may affect the efficiency of the business operations.

Any increase in cyberattacks sponsored by state actors means the likelihood of target attacks may also increase.

We use various system protections to reduce the threat from third parties, with ongoing assessment and analysis of risks and remediation that could be taken to mitigate them. The Group IT team consists of high-quality trained individuals tasked with ensuring systems’ resilience and ongoing investment to prevent obsolescence within our key operating systems.

All our employees receive regular information security training which is regularly assessed and developed to ensure that it remains relevant and appropriate.

Systems security policies and procedures are embedded within the business.