Tesco 2013 Annual Report Download - page 43

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39
Tesco PLC Annual Report and Financial Statements 2013
OVERVIEW BUSINESS REVIEW PERFORMANCE REVIEW GOVERNANCE FINANCIAL STATEMENTS
Principal risks Key controls and mitigating factors
Reputational risk
Failure to protect the Group’s reputation and brand in the face of
ethical, legal or moral challenges could lead to a loss of trust and
confidence, a decline in customer base and affect our ability to
recruit and retain good people
• Tesco Values embedded in how we do business at every level
• Our embedded Group Code of Business Conduct and Bribery Act
Guidelines guide our behaviour in dealing with customers,
employees and suppliers
• Stakeholder communication and engagement to understand their
views and reflect them in our strategy
• Commitment to tackling societal and environmental issues through
our Community Plan and activities. Our new Value – We use our scale
for good – aims to tackle some of the most important issues for society
– see our Tesco and Society Report 2013 for more details
• Comprehensive supplier auditing and product surveillance
programmes in place to minimise risks associated with labour
standards and product integrity
• Governance committees, including Executive, Group Commercial,
Corporate Responsibility, Social Responsibility, Compliance and
Information Security Committees, guide and monitor policies
Performance risk in the business
Risk that business units (including the UK) underperform against
plan and against competitors and our business fails to meet
the stated strategy in full
• Board, Executive Committee and various operational committees,
including the UK Operating Board, meet regularly to review
performance risks
• All business units have stretching targets based on the Steering
Wheel balanced scorecard system; performance against budgets
and KPIs are monitored continually and reported regularly to Board
• Clear budgets, goals and objectives set for subsidiary CEOs, with
a high proportion of reward based on achievement
• Diversification strategy minimises impact of changes in economic
climate
Property
Continuing acquisition and development of property sites carries
inherent risk; targets to deliver new space may not be achieved;
challenges may arise in relation to finding suitable sites, obtaining
planning or other consents and compliance with varying country
design and construction standards
• Group Property Strategy, Property Acquisition and related
committees regularly review, and closely control, all aspects
of property acquisition, planning and construction processes
to ensure standards are met and risks are minimised
• Group Property blueprints adopted to ensure consistency
of approach
• Group and country Compliance Committees monitor legal and
regulatory compliance in property activities
• Mall management systems in place to assist tenant management
Economic risks
In each country where we operate, we are impacted by the
underlying economic environment and the fiscal measures
that apply to the retail sector
• External economic outlook is carefully considered when developing
strategy and continuously monitored through the Executive
Committee’s review of performance
• A central Euro Disaster Committee monitors developments
in the Eurozone
• Ongoing monitoring of country developments through local CEOs
• We try to anticipate and contribute to important changes in public
policy wherever we operate
Political and regulatory risks
In each country where we operate, we may be impacted by legal
and regulatory changes, increased scrutiny by competition
authorities and political developments relevant to domestic
trade and the retail sector
• Engagement with governmental and non-governmental
organisations to represent views of our customers and employees
• Ongoing monitoring of country developments through local CEOs
• Group and country Compliance Committees monitor legal and
regulatory compliance
• The Tesco Bank Executive and Treating Customers Fairly Board
oversee Tesco Bank’s compliance with regulatory requirements
• Compliance with the UK Groceries Supply Code of Practice (‘Code’)
is carefully monitored by our Code Compliance Officer
• We try to anticipate and contribute to important changes in public
policy wherever we operate
• Business development follows thorough due diligence work