Holiday Inn 2014 Annual Report Download - page 167

cyber attacks, fraudulent use, loss or misuse by employees
and breaches of our vendors’ security arrangements amongst
others. The legal and regulatory environment around data
privacy and requirements set out by the payment card industry
surrounding information security across the many jurisdictions
in which the Group operates are constantly evolving. If the
Group fails to appropriately protect information and ensure
relevant controls are in place to enable the appropriate use
and release of information through the appropriate channels
in a timely and accurate manner, IHG System performance,
guest experience and the reputation of the Group may be
adversely affected. This can lead to revenue losses, fines,
penalties, legal fees and other additional costs.
The Group is exposed to a variety of risks associated with
safety, security and crisis management
There is a constant need to protect the safety and security
of our guests, employees and assets against natural and
man-made threats. These include, but are not limited to,
exceptional events such as extreme weather, civil or political
unrest, violence and terrorism, serious and organised crime,
fraud, employee dishonesty, cyber crime, pandemics, fire and
day-to-day accidents, incidents and petty crime which impact
the guest or employee experience, could cause loss of life,
sickness or injury and result in compensation claims, fines
from regulatory bodies, litigation and impact reputation.
Serious incidents or a combination of events could escalate
into a crisis which, if managed poorly, could further expose
the Group and its brands to significant reputational damage.
The Group requires the right people, skills and capability
to manage growth and change
In order to remain competitive, the Group must employ the
right people. This includes hiring and retaining highly skilled
employees with particular expertise or leadership capability.
The implementation of the Group’s strategic business plans
could be undermined by failure to build a resilient corporate
culture, failure to recruit or retain key personnel, unexpected
loss of key senior employees, failures in the Group’s succession
planning and incentive plans, or a failure to invest in the
development of key skills.
Some of the markets in which the Group operates are
experiencing economic growth, and the Group must compete
against other companies inside and outside the hospitality
industry for suitably qualified or experienced employees. Some
emerging markets may not have the required local expertise
to operate a hotel and may not be able to attract the right talent.
Failure to attract and retain employees may threaten the success
of the Group’s operations in these markets. Additionally, unless
skills are supported by a sufficient infrastructure to enable
knowledge and skills to be passed on, the Group risks losing
accumulated knowledge if key employees leave the Group.
The Group is required to comply with existing and changing
regulations across numerous countries, territories
and jurisdictions
Government regulations affect countless aspects of the Group’s
business ranging from corporate governance, health and safety,
the environment, bribery and corruption, employment law and
diversity, disability access, data privacy and information
protection, financial, accounting and tax. Regulatory changes
may require significant changes in the way the business operates
and may inhibit the Group’s strategy, including the markets the
Group operates in, brand protection, and use or transmittal
of customer data. If the Group fails to comply with existing
or changing regulations, the Group may be subject to fines,
prosecution, loss of licence to operate or reputational damage.
The Group is exposed to risks related to ethics and responsible
business practices
The reputation of the Group and the value of its brands are
influenced by a wide variety of factors, including the perception
of stakeholder groups such as guests, owners, suppliers and
communities in which the Group operates. The social and
environmental impacts of its business are under increasing
scrutiny, and the Group is exposed to the risk of damage to
its reputation if it fails to (or fails to influence its business
partners to) undertake responsible practices and engage
in ethical behaviour, or fails to comply with relevant
regulatory requirements.
The Group may face difficulties insuring its business
Historically, the Group has maintained insurance at levels
determined to be appropriate in light of the cost of cover and the
risk profile of the business. However, forces beyond the Group’s
control, including market forces, may limit the scope of coverage
the Group can obtain and the Group’s ability to obtain coverage at
reasonable rates. Other forces beyond the Group’s control, such
as terrorist attacks or natural disasters, may be uninsurable
or simply too expensive to insure. Inadequate or insufficient
insurance could expose the Group to large claims or could
result in the loss of capital invested in properties, as well as
the anticipated future revenue from properties, and could leave
the Group responsible for guarantees, debt or other financial
obligations related to such properties.
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GROUP FINANCIAL STATEMENTS
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ADDITIONAL INFORMATION