Experian 2011 Annual Report Download - page 43

Business review Risks and uncertainties xx
Risk area Potential impact Mitigation strategies
Exposure to material
adverse litigation
Related strategy:
• Focus on data and analytics
• Drive profitable growth
>The Group is involved in litigation claims in the
United States and Latin America, including a
number of class actions in the United States.
As is inherent in such proceedings, outcomes
cannot be predicted with certainty and there is
a risk of unfavourable outcomes to the Group.
>The Group vigorously defends all pending and
threatened litigation claims. The Group retains
internal and external legal professionals to
assist in the effective management and disposal
of litigation proceedings. Insurance coverage
is maintained against litigation risks where
such coverage is feasible and appropriate.
Exposure to country and
regional risk (political,
financial, economic, social)
particularly in the United
States and United Kingdom
Related strategy:
• Drive profitable growth
>The Group’s global footprint subjects its
businesses to economic, political and
other risks associated with international
sales and operations. A variety of factors,
including changes in a specific country’s or
region’s political, economic, or regulatory
requirements, as well as the potential for
geopolitical turmoil, including terrorism and
war, could result in loss of services, prevent
our ability to respond to agreed service levels
or fulfil other obligations. These risks are
generally outside the control of the Group.
>The Group’s portfolio is diversified by
geography, by product, by sector and by
client in order to protect itself against many of
these fluctuations, especially those that are
restricted to individual territories and market
sectors. The Group operates in 41 countries
and derives 29% of revenue from outside the
United States and the United Kingdom.
Strategic investments
including acquisitions and
other organic initiatives may
not meet expectations
Related strategy:
• Drive profitable growth
>The Group continues to expand its global
reach and extend its capabilities through
a combination of acquisitions, strategic
alliances/joint venture and organic strategic
investments. The contributions of these
businesses and initiatives to the Group
may result in financial outcomes that are
different than expected. Refer to note 40
to the Group financial statements for a
detailed description of the implications
of these acquisitions to the Group.
>The Group assesses all acquisitions rigorously,
using both internal and external professional
advisers. In addition, the Group conducts
extensive post-acquisition and organic
investment reviews to ensure performance
remains consistent with business plans.
Exposure to the
unpredictability of financial
markets (foreign exchange,
interest rate and other
financial risks)
Related strategy:
• Drive profitable growth
• Optimise capital efficiency
>As the Group operates on an international
basis, it is exposed to the risk of currency
fluctuations and the unpredictability of financial
markets in which it operates. Refer to note 8 to
the Group financial statements for a detailed
description of these financial related risks.
>The Group’s financial risk management
focuses on the unpredictability of financial
markets and seeks to minimise potentially
adverse effects on the Group’s financial
performance. Refer to note 8 to the Group
financial statements for a detailed description
of the Group’s mitigation strategies.
Exposure to increasing
competition
Related strategy:
• Drive profitable growth
>The Group operates in a number of geographic,
product and service markets that are highly
competitive. The competitor environment
continues to be dynamic with new entrants
that may have scale, integration capability and
partner networks. Competitors may develop
products and services that are superior to ours
or that achieve greater market acceptance
than our products and services which could
result in the loss of clients or reduction
in revenue. Please refer to the business
and market overview section for further
information on Experian's market position.
>The Group is committed to continued
research and investment in new data
sources, people, technology and products
to support its strategic plan. For example,
Experian was the first and is to date the only
major credit reporting agency to include
residential rental payment data in US
credit reports following the acquisition of
RentBureau in June 2010. RentBureau is the
largest and most widely used credit bureau
for the US apartment rental industry.
Loss or infringement of
intellectual property rights
Related strategy:
• Focus on data and analytics
• Drive profitable growth
>The Group’s success depends, in part, upon
proprietary products and/or services and
related intellectual property rights. The extent
to which intellectual property rights can be
protected varies in different jurisdictions.
Third parties may claim that the Group is
infringing their intellectual property rights
or our intellectual property rights could be
infringed by third parties. If the Group does
not enforce our intellectual property rights
successfully, our competitive position may
suffer, which could harm our operating results.
>The Group, where appropriate and feasible,
relies upon a combination of patent,
copyright, trademark and trade secret laws,
as well as various contractual restrictions,
to protect our proprietary products and
services and continues to monitor this
situation. The Group also vigorously defends
all third party infringement claims.
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