Tesco 2012 Annual Report Download - page 45

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Principal risks
Change from
2010/11 Key controls and mitigating factors
Reputational risk
Failure to protect the Group’s
reputation and brand 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
 An embedded Group Code of Business Conduct guides 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
 Governance committees, including Corporate Responsibility, Sustainability, Compliance
and Information Security Committees, guide and monitor policies
People
Failure to attract, retain, develop
and motivate the best people
with the right capabilities at all
levels could limit our ability
to succeed
 Significant investment in training, development and incentives, including Executive
Committee Talent Cycle, Talent Planning, Leadership Development and succession
planning for future needs of the business
 Clear processes to understand and respond to employees’ needs through our People
Matters Group, staff surveys, regular performance reviews, involvement of trade
unions in relevant markets and regular communication of business developments
 Pay, pension and share plan arrangements help us to attract and retain good people
Business strategy
If our strategy follows the wrong
direction or is not effectively
communicated or implemented
then the business may suffer
 Diversification and pursuit of growth in emerging markets under our strategy is
reducing reliance on limited business areas
 Regular review of strategic matters by Board and Executive Committee; Board
dedicates two full days a year to Group strategy
 Significant resource invested to communicate strategy effectively to those delivering it
 Consistent Operational Plans developed throughout the Group to ensure delivery
 Steering Wheel balanced scorecard system helps monitor delivery
 Structured stakeholder engagement programmes
Competition and
consolidation
Failure to compete on areas
including price, product range,
quality and service in increasingly
competitive UK and overseas
retail markets could impact our
market share and adversely affect
the Group’s financial results
The consolidation of competitors,
key geographical areas or markets
through mergers or trade
agreements could also adversely
impact our market share
Competition
(UK, US
and Asia)
 Strategy to have broad appeal on price, range and store format to allow us to
compete in different markets
 Regular review of markets, trading opportunities and competitor activities,
including online
 Performance tracked against relevant KPIs and measures that customers tell us
are critical to their shopping experience
 Constant monitoring of customer perceptions of Tesco and competitors to ensure
we can respond quickly as appropriate
 Monitoring of legislative changes, legal framework and compliance
Competition
(Europe)
Consolidation
Financial strategy
Risks relate to an incorrect
or unclear financial strategy
or plans
 Regular review of strategy, risks and financial performance by Board and Executive
Committee, with external advice as required
 Consistent Operational Plans and Budgets developed throughout the Group to
ensure delivery
 Steering Wheel balanced scorecard system helps monitor delivery
Tesco PLC Annual Report and Financial Statements 2012 41
STRATEGIC REVIEW PERFORMANCE REVIEW GOVERNANCE FINANCIAL STATEMENTSOVERVIEW
General information Directors’ remuneration reportBoard of Directors Principal risks and uncertainties Corporate governance