Experian 2011 Annual Report Download - page 42

Experian Annual Report 2011
Risks and uncertainties continued
Risk area Potential impact Mitigation strategies
Product/service or
technology obsolescence
Related strategy:
• Drive profitable growth
• Optimise capital efficiency
>Without the timely introduction of new or
enhanced products and services, the Group’s
offerings will become technologically or
commercially obsolete over time. Without
continued investments in our technology
infrastructure, the Group may not be able to
support changes in the way our businesses
and clients use and purchase information.
In either case, revenue and operating
results would suffer. Refer to the business
and market overview section of this report
for some examples of how business units
are delivering innovative solutions.
>Product innovation is a key driver of growth
for Experian in all our markets and we have
continued to invest strongly in new data
sources and new analytical products,
together with the platforms that support
their worldwide delivery. Over 10% of Group
revenues come from products developed
during just the past five years. In addition,
nearly 20% of our global costs are in IT and
data. Detailed competitive and market analyses
are performed which provide the foundation
of a rigorous product and services investment
identification and selection process.
Interruptions in business
processes or systems
Related strategy:
• Optimise capital efficiency
• Drive profitable growth
>The Group’s ability to provide reliable
services largely depends on the efficient and
uninterrupted operation of our computer
network systems, data and call centres, as well
as maintaining sufficient staffing levels. System
or network interruptions, or the significant
reduction in key staff or management resulting
from a pandemic outbreak, could delay
and disrupt our ability to develop, deliver or
maintain our products and services, causing
harm to our business and reputation and
resulting in loss of clients or revenue.
>The Group has strict standards, procedures
and training schemes for physical security.
Comprehensive business continuity plans
and incident management programmes
are maintained to minimise business and
operational disruptions including pandemic
incidents. The Group maintains full duplication
of all information contained in databases
and runs back-up data centres. Support
arrangements, strict standards, procedures
and training schemes for business continuity
have been established with third party
vendors. The Group also monitors potential
pandemic threats and adjusts action plans.
Dependence on recruitment
and retention of highly
skilled personnel
Related strategy:
• Focus on data and analytics
• Drive profitable growth
>The ability of the Group to meet the demands of
the market and compete effectively with other
IT suppliers is, to a large extent, dependent on
the skills, experience and performance of its
personnel. Demand is high for individuals with
appropriate knowledge and experience in the
IT and business services market. The inability
to attract, motivate or retain key talent could
have a serious consequence on the Group’s
ability to service client commitments and grow
our business. Please refer to the key resources
section of this report for further information
on how Experian is investing in its people.
>Effective recruitment programmes are
ongoing across all business areas, as
well as personal and career development
initiatives. Talent identification and
development programmes have been
implemented and are reviewed annually.
Compensation and benefits programmes are
competitive and also regularly reviewed.
Other risks
Risk area Potential impact Mitigation strategies
Exposure to consolidation
among clients and markets
Related strategy:
• Drive profitable growth
>The financial services, mortgage, retail and
telecommunications industries are intensely
competitive and have been subject to
consolidation in recent years. Consolidation
in these and other industries could result
in reductions in the Group’s revenue
and profits through price compression
from combined service agreements or
through a reduced number of clients.
>No single client accounts for more than 2%
of the Group’s revenue, which reduces the
probability of this potential risk having a
significant impact on the Group’s business.
In addition, the Group continues to expand
in other market segments such as the public
sector, telecoms, utilities and healthcare, as
well as invest in a wide range of counter-cyclical
products and solutions, across all relevant
business lines. Refer to the key performance
indicators section of this report for additional
information on Experian’s revenue dependency
on the top 20 clients and percentage of revenue
from verticals other than financial services.
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