Attraction/retention of talent/HR/labour relations
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Potential impact
- 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
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Management/mitigation
- 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
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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
- Established Diversity & Inclusion Council
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Cyber/ IT failure/ general data protection regulations ('GDPR')
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Potential impact
- 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
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Management/mitigation
- Increased investment in cyber security, including recruitment of specialised resources across the Group, technical measures to protect data assets and the procurement of several services at Group level
- Board approved governance structure and cyber security strategy
- GDPR compliance plans in place, tailored to each division’s exposure
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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 and ransomware events in other companies
- Significant improvements in our resilience, supported by an ongoing maturity programme
- Preparations for California Consumer Privacy Act (CCPA)
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Terrorism
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Potential impact
- 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
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Management/mitigation
- 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
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Opportunity
Change in risk in the year
- UK Government threat level reduced from ‘severe’ to ‘substantial’, but we remain very vigilant
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Safety, litigations and claims
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Potential impact
- 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
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Management/mitigation
- 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 programmes, supported by Group internal audit
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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
- Zero responsible fatalities in the year
- Significant reduction in Fatality Weighted Injuries (FWI), the Group’s key safety metric
- Global insurance market conditions have deteriorated significantly; the Group was able to achieve satisfactory renewals due to our commitment to safety and to effective litigation/claims management
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Natural catastrophe/extreme weather/loss of key facility
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Potential impact
- 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
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Management/mitigation
- 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
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Opportunity
Change in risk in the year
- General increase in extreme weather events around the globe, including hurricanes, storms and wildfires
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Credit/financing risk
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Potential impact
- 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
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Management/mitigation
- 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 programmes and debt capital market issuances
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Opportunity
- Investment grade rating and proven track record give efficient access to credit markets enabling investment in growth
Change in risk in the year
- RCF extended for a further one year
- Fitch rating raised from BBB-/stable to BBB/stable
- £664 million financing raised in US private placement and bond markets to refinance 2020 debt maturities
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