National Grid 2014 Annual Report Download - page 25

Strategic Report Corporate Governance Financial Statements Additional Information
Principal risks
Our corporate risk profile contains the principal risks that the Board considers to be the main ones currently faced by the Company.
Anoverview of these risks is provided below, together with examples of the relevant controls and mitigating actions we are taking.
Strategic objective Risk description Example of mitigations
Deliver growth Failure to identify the right opportunities to
execute our strategic ambition.
Failure to sufficiently grow our core business
and have viable options for new business over
the longer term would negatively affect the
Group’s credibility and jeopardise the
achievement of intended financial returns.
Our ability to achieve our ambition for growth is
subject to a wide range of external uncertainties,
including the availability of potential investment
targets and attractive financing; and internal
uncertainties, such as the performance of our
operating businesses and our business
planning model assumptions.
• We regularly monitor and analyse market conditions,
competitors and their potential strategies, as well as the
performance of our Group portfolio. We are also looking
to access new sources of finance and capabilities
through partnering.
• We have internal processes for reviewing and approving
investments in new businesses, disposals of existing
ones and organic growth investment opportunities.
These processes are reviewed regularly to make sure our
approach supports our short- and long-term strategies.
We undertake due diligence exercises on investment or
partnering opportunities and carry out post-investment
reviews to make sure we learn lessons for the future.
Engage externally Inability to influence future energy policy.
Policy decisions by regulators, governments
and others directly affect our business. We
must engage widely in the energy policy debate,
making sure our position and perspective help
to shape future policy direction.
• In the UK, we are working closely with DECC on Electricity
Market Reform (EMR) plans. We have also restructured
our business so we are prepared for our new role under
EMR and to make sure we are well positioned to deliver
value under RIIO. The Board is also continuing to monitor
the increasing public debate around the cost, availability,
security and sustainability ofUK energy supplies.
• In the US, we have begun to engage our external
stakeholders about the role of the utility company of the
future, under the banner of Connect21. We believe this
conversation will help shape the regulatory and fiscal
regime in the US in the future. We are maintaining our
jurisdictional focus and we will continue to file new rate
cases so our businesses can earn a fair and reasonable
rate of return. Our rate filings include structural changes
where appropriate, such as revenue decoupling
mechanisms, capital trackers, commodity-related bad
debt true-ups and pension and other post-employment
benefit true-ups, as described on pages 162 to 165.
Engage our people Inability to secure the business capacity,
appropriate leadership capability and
employee engagement levels required
todeliver our vision and strategy.
It is through the high-quality work of our
employees that we will achieve our vision,
respond to the changing needs of our
stakeholders and create a competitive
advantage. Obtaining and fostering an
engaged and talented team that has the
knowledge, training, skills and experience to
deliver on our strategic objectives is vital to our
success. We must attract, integrate and retain
the talent we need at all levels of the business.
• We have identified the core capabilities that align with our
strategic ambition and continue to develop our Academy
to help develop the right skills for the future (see page 40).
• We are involved in a number of initiatives to help secure
the future engineering talent required (see page 40).
• We continue to develop our succession plans for key
roles, including leadership.
• We have described on page 41 some of the ways we
seek to engage employees, including how we promote
inclusion and diversity.
• We monitor employee engagement and formally solicit
employee opinions via a Company-wide employee
surveyannually.
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