VT Group is committed to ensuring that high quality risk management systems are in place across the group. The objective is to support the delivery of long term sustainable returns for shareholders and to safeguard the interests of customers and employees through the effective management of risk.
Group risk management process
The Group’s management operates a risk assessment process to identify and assess the risks affecting business performance. The process requires each business division to identify the key risks to their plans, their likelihood and impact and the actions being taken to manage those risks. Divisional risk registers are reviewed by their respective management teams and the consolidated risk profile for VT Group as a whole is challenged by the Group Executive Committee.
Below are our Key Risk areas and how we manage them;
Contract Performance Management
A significant proportion of our business derives from long term, fixed price contracts with customers. The challenge to our business is the management of these long term contracts to customer satisfaction whilst maintaining expected returns.
To address these risks we hold regular project appraisals, maintain continued dialogue with the customer and are progressively applying the Project Lifecycle Framework to contracts across the Group. All major contracts in all business divisions have a risk identification and management process in place and significant risks are considered for inclusion in divisional risk registers.
Growth strategy and major bid pricing
The Groups expansion encompasses organic growth, acquisitions and potentially entering into new markets. Both acquisitions and entry into new markets bring with them an extra element of risk as these may involve activities not currently carried out by the Group. To address these risks we undertake extensive due diligence, carefully consider the groups ability to manage and fund any new activities arising via a rigorous bid acceptance process and mandate that all such activities require main board approval.
Dependence on government contracts
Given that a significant proportion of our business activities are derived from Government authorities, the Groups business is susceptible to changes in government policy, budget allocations and the changing political environment, both in the UK and worldwide. The Group has sought to address this risk in recent years by diversifying the service offering from a largely UK based defence oriented business to provision of a broader range of services on an international basis.
Changes in laws and regulations
The Group is subject to various laws and regulations in different jurisdictions, including state aid, procurement, export control, taxation and environmental health and safety laws. These laws and regulations are complex, subject to change and can vary from country to country. The Group addresses this risk through formal compliance policies, employing suitably qualified individuals and retaining appropriate professional advisors.
Joint ventures
The Group has a number of joint venture operations. Given their importance to the Group, the boards of these joint ventures include executive directors and members of the GEC responsible for representing the Group’s interests. These individuals maintain regular dialogue with key stakeholders, actively engage with the entities and gain operational involvement where appropriate.
Environmental and health and safety liabilities
The Groups operating businesses are exposed to risks associated with the contamination of their sites and former sites, non compliance with environmental, health and safety law and personal injury claims resulting from injuries sustained at work, including historical exposures to asbestos. The Group is fully committed to maintaining a framework of Group wide policies and procedures to minimise these risks.
Dependence on key people
The recruitment, retention and development of highly skilled competent people is key to the success of the Group. The failure to attract and retain key personnel, or the cost of doing so could materially affect our ability to achieving the Group planned strategic growth. We manage this risk by actively engaging with our people through communication forums and have introduced an employee opinion survey to obtain a better understanding of the range of issues that contribute to the level of staff satisfaction.
Financial Risk and Capital Management
VT operates a number of policies to protect against financial and capital management risk. These include policies covering liquidity, credit, interest rates, foreign currency and market price risk.
For more on our approach to managing risk, please see our Annual Report and Accounts