Tesco 2014 Annual Report Download - page 26

Principal risks Key controls and mitigating factors
Technology
Any significant failure in the IT processes of our retail
operations, online and in stores, would impact our
ability to trade
As the digital marketplace grows, a lack of investment
in technology, or investment in the wrong areas,
may constrain multichannel growth and impact
our competitiveness
Insufficient investment in, or ineffective implementation
of, controls over our online presence could increase the
likelihood of a successful cyber-attack
Whilst investment is made in new technologies,
there is a risk that investment is not made to maintain
the controls over the existing technology, which may
impact systems availability and security, including
the security of personnel, supplier or customer data
As customers and colleagues become increasingly
sensitive to matters of data usage, storage and security,
the inherent reputational risks of the IT control
environment have increased, in conjunction with
the financial and regulatory risks
•Our IT strategy is approved and reviewed by the Executive Committee to
ensure that investments in IT systems and innovations improve business
efficiency and customers’ shopping experience
•We continue to invest in IT to respond to the growing range of IT-related
threats and risks
• The Group Technology Committee monitors controls to maintain the
integrity and efficiency of our IT infrastructure and data
•The Information Security Committee meets regularly to review the
development and implementation of policies
•Rigorous governance processes must be followed for new systems
implementations and ongoing change management of existing IT
•The reporting lines of our Group Information Security and IT Security
teams have been merged to allow for better integration and efficiencies
in addressing IT security risks
•Processes are in place to monitor and deal with significant IT
security incidents
•Improved Group Wide Area Network infrastructure and the
standardisation and centralisation of systems across international
operations will help to improve the availability and consistency
of technology
People
Failure to attract, retain, develop and motivate the
best people with the right capabilities at all levels could
limit our ability to succeed
The world of multichannel retail is increasingly
people-focused and demands new technical and
social skills. Our leaders must play a critical role in
helping to model the organisation we want to be
•Our People Matters Group (‘PMG’) regularly meets to review and
monitor people policies, procedures and risks
•Clear processes are in place to ensure we understand and respond to
employees’ needs through our PMG, colleague surveys, regular
performance reviews, the involvement of trade unions in relevant
markets and the regular communication of business developments
•Talent planning and people development is a key objective for each
member of the Executive Committee
•Significant investment is made in training, development and incentives,
including through our Executive Committee Talent Cycle, talent planning,
leadership development and succession planning for the future needs of
the business
•The Employment Policy Committee is responsible for the development
of our Employment Policy Blueprint to ensure we have appropriate pay,
pension and share plan arrangements to attract and retain good people
across the business
Treasury
Effective cash and debt management is critical to the
running of the business. Failure to ensure the availability
of funds to meet the needs of the business or to manage
interest or exchange rate fluctuations or credit risks could
limit our ability to trade profitably
•An annual Finance Plan and General Board Authority set out the controls
and authority limits for Treasury matters
•We expect our financial disciplines and guiderails to have a positive
impact on cash and debt management
•The Balance Sheet Committee meets regularly to monitor Treasury risks
and manage the liquidity needs of the business
•An annual Treasury Review is carried out by the Executive Committee
•Comprehensive Treasury policies set out processes and controls around
the use of financial instruments, hedging, liquidity, bank account
management and the segregation of duties required between our back
and front offices
•Further detail on the management of financial risks can be found in the
‘Financial risks review’ table on page 25 and in Note 22 on page 104 of
the Annual Report and Financial Statements 2014
Other information
Governance Financial statementsStrategic report
Tesco PLC Annual Report and Financial Statements 2014 23