Page 135 - Sigmaroc Annual-Report 2023

135
Risk
Description
Mitigation
Finance, Liquidity and Currency
Foreign exchange risk: As the Group transacts in currencies other than Sterling, exchange rate fluctuations may adversely impact the Group’s results.
Credit risk: Through its customers, the Group is exposed to a counterparty risk that accounts receivable will not be settled leading to a financial loss to the Group.
Liquidity risk: Insufficient funds could result in the Group being unable to fund its operations or to continue to invest organically or to undertake acquisitions.
Interest rate risk: Movements in interest rates could adversely impact the Group and result in higher financing payments to service debt.
Foreign exchange risk: The Group undertakes limited foreign exchange transactions as it sells domestically or in domestic currency with largely local input costs. Some M&A, OpEx and CapEx requires foreign exchange purchases and management considers foreign exchange hedging strategies where significant exposures may arise.
Credit risk: Customer credit risk is managed by each subsidiary. The Group principally manages credit risk through management of customer credit limits. The credit limits are set for each customer based on the creditworthiness of the customer and the anticipated levels of business activity. These limits are initially determined when the customer account is first set up and are regularly monitored thereafter.
Liquidity risk: Ensure sufficient funding and facilities in place to meet any foreseeable peak in borrowing requirements and liabilities by maintaining strong relationships with our banks and shareholders. Internally, we continuously monitor forecasts and cash flows to ensure that we maintain significant headroom and have self-imposed 2 times leverage, which is only exceeded temporarily and worked down as quickly as possible.
Interest rate risk: The Group finances its operations through a mixture of retained profits and bank borrowings, based on floating rates. Interest rate fixing has been reviewed but none have been entered into during the year or at the year end.
Health and Safety
Failure to manage health and safety risks could cause harm to our employees or those around us and expose the Group to significant potential disruption, regulatory breaches, liabilities and reputational damage.
We safeguard the health and safety of employees, contractors and others working on behalf of the Group with experienced health and safety professionals who provide relevant training and help develop a strong culture alongside the management teams; all of which is overseen and audited by our Group HSEQ director with the support of consultants where necessary.
We are constantly improving communication and reporting across the Group through simple and effective systems and processes such as our HS Engagement and Monitoring software, Visible Felt Leadership, HS Committees, back to work and pitstops.
IT and Cyber
Disruption to the IT environment could affect our operational performance and lead to reputational damage, regulatory penalties or significant financial loss.
Failure to keep up to date with advances in technology could impact demand and our ability to access the market.
IT support teams and service providers continue to monitor and respond to new and expanding cyber risks by implementing best practice in IT security management, back-up systems and risk management software courtesy of our cyber insurance providers.
Outdated software and hardware are updated, and cloud solutions embraced, to minimise negative impacts and allow continual operations.
Legal and Regulatory
Exposure to developments that lead to political, legal and regulatory changes requiring significant changes to Group operations which could impact the Group’s financial results, together with any associated negative reputational damage.
Inadvertent failure to comply with elements of a significantly increased governance, legislative and regulatory business environment.
A legal or regulatory breach could result in disruption to operations, financial consequence and reputational damage.
Group general counsel and engagement of external specialists to monitor legislative changes and conduct ongoing training.
Hold appropriate business accreditations and insurances and ensure there are compliance procedures, policies, ISO standards and independent audit processes which seek to ensure that regulatory and compliance procedures are fully complied with.