Operational Risks

Potential impact

 Management/mitigation

• Lack of available management talent/leadership skills can inhibit growth
• Shortages in drivers and other key staff can disrupt operations and lead to wage and benefits cost inflation
• Increased unionisation and/or poor labour relation presents increased risk of strike or operational disruption

• The Group is committed to employee engagement and invests in a number of retention programmes
• Appropriate training is provided for managers and supervisors
• Reward and recognition programmes are established to further enhance employee engagement
• Focus on the effective management of stakeholder and union relationships, and the advice of specialist outside counsel is sought where necessary

Opportunity

• Ensuring we have an agile, skilled workforce will enable us to adapt to emerging challenges and opportunities

Change in risk in the year

• Low levels of unemployment in key markets have led to recruitment and retention challenges and cost inflation
• Appointment of Group Talent Director

• Major IT failure could disrupt operations and lead to loss of revenue, especially in the Coach businesses
• Data breach involving a loss of customer data could result in reputational damage and significant remedial costs
• Breach of the EU Regulation (‘GDPR’) could result in reputational damage and additional costs

• Comprehensive back-up procedures and disaster recovery plans are established
• Dedicated Cyber Risk Security Committee
• Extensive independent expert testing has been carried out for cyber risk and recommendations implemented
• GDPR compliance plans in place, tailored to each division’s exposure

Opportunity

• Strengthened resilience against cyber threats and IT outages increases awareness and expertise across the Group and facilitates greater leverage of technology

Change in risk in the year

• Cyber threat environment continues to be challenging, as demonstrated by high profile data breaches in other companies
• Significant improvements in our resilience, supported by an ongoing maturity programme

• Direct impact through asset damage, disruption to operations and revenue loss
• Potential indirect impact from a general reduction in the public’s appetite to travel reducing demand and revenue

• Close liaison with government agencies and industry partners
• Major incident/emergency plans are developed in all divisions
• Insurance coverage is available and in place for some terrorism related risks
• Risk assessment of any new business growth opportunity

Opportunity

• n/a

Change in risk in the year

• Although we have not seen the same level of attacks in the UK as we saw in 2017, the Government threat level remains unchanged at ‘Severe’

• Major safety-related incident could impact the Group both financially and reputationally
• Higher than planned claims or cash settlements could adversely affect profit and cash outflow
• Non-compliance with regulations can create legal and financial risk

• Very strong safety culture driven from the Group Chief Executive
• Dedication to leading edge safety technology
• Appropriate insurance coverage for accident-related claims to employees and third parties
• Experienced claims management and legal teams in each division
• All divisions have established safety audit programs, supported by Group Internal Audit

Opportunity

• Continued relentless focus on safety and investment in technology should facilitate risk and cost reductions and enable differentiation in our customer offering

Change in risk in the year

• Reduced incident severity in most divisions as safety improvements continue to gain traction

• Loss of a key location to either a man-made hazard such as fire, or natural catastrophe such as a hurricane, can result in asset loss and lost revenue
• Widespread events such as extreme weather can also interrupt operations and cause revenue loss even if the Group’s assets are undamaged

• Geographical diversification of the Group provides a natural hedge to this risk.
• Established emergency and continuity plans in each division
• Insurance coverage is available and in place for some hazard-related risks

Opportunity

• n/a

Change in risk in the year

• n/a

• Contract-based operations such as North America and Spanish urban are exposed to late or non-payment risk from customers, impacting Group liquidity
• A material increase in interest rates would increase the Group’s cost of borrowing
• Material tightening in investment-grade credit markets could impact the Group’s liquidity

• Close monitoring of receivables and appropriate provisions made for possible non-collection
• Strong relationships with a number of banks
• Appropriate liquidity maintained through committed bank facilities, finance lease programme, and debt capital market issuances

Opportunity

• Investment grade rating and proven track record give efficient access to credit markets enabling investment in growth

Change in risk in the year

• Increase in USD interest rates
• Amended and extended RCF for further 2+2 years
• Bridging finance in place to next bond maturity