Carphone Warehouse 2016 Annual Report Download - page 22

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Dixons Carphone plc Annual Report and Accounts 2015/16
Strategic Report
Principal risks to achieving the Group’s objectives
20
The Group recognises that taking risks is an inherent part of doing business and that competitive advantage can be gained
through effectively managing risk. The Group continues to develop robust risk management processes, integrating risk
management into business decision-making. The Group’s approach to risk management is set out in the Corporate Governance
Report on pages 44 to 46. The principal risks and uncertainties, together with their potential impacts, are set out in the tables
below along with an illustration of what is being done to mitigate them.
Specific risks and potential impacts
Principal risk Specific risks Potential impacts
1. Dependence on
networks and key
suppliers
• The Group is dependent on relationships with key suppliers
to source products on which availability may be limited
• Changes in MNO strategies in relation to the Group, or more
generally, and / or their performance, could materially affect the
revenues and profits of the business
• Mergers between the MNOs could lead to a change in their
strategies and relationships with the Group
• Reduced revenue and profitability
• Deteriorating cash flow
• Reduced market share
2. Consumer environment
and sustainable
business model
• Failure to respond with a business model that enables the
business to compete against a broad range of competitors on
service, price and / or range in a changing economy
• Failure to respond effectively to changes in the industry,
economic and / or competitor landscape
• Failure to accommodate changes in consumer preferences
and behaviours
• Reduced revenue and profitability
• Deteriorating cash flow
• Reduced market share
3. Greek exit from
the Euro
• Possible exit of Greece from the Euro (‘Grexit’) could lead to a
deterioration in consumer confidence and disposable income
resulting in a significant impact on our Greek business, Kotsovolos
• Reduced revenue and profitability
• Deteriorating cash flow
4. IT systems and
infrastructure
• Failure to invest adequately and appropriately in IT systems and
infrastructure, or an inability to effectively integrate IT assets
across the Group constrains the Group’s ability to grow and / or
adapt quickly
A key system becomes unavailable for a period of time
• Reduced revenue and profitability
• Deteriorating cash flow
• Loss of competitive advantage
• Restricted growth and adaptability
• Reputational damage
5. Information security • Major loss of customer, colleague, or business
sensitive data
Vulnerability to attack, malware, and associated cyber risks
owing to under-investment in people, systems, and
safeguarding processes
• Reputational damage
• Financial penalties
• Reduced revenue and profitability
• Deteriorating cash flow
• Loss of competitive advantage
00_DC 2016 Annual Report.pdf 20 11/07/2016 18:34