Major Enterprise Resource Planning (ERP) implementation has begun in all three divisions during 2014. Each ERP project has
fortnightly Executive overview, including management of risk. The new Group intranet has added substantial capability, which
replaces a number of legacy systems
CHANGES DURING 2014
Risk Appetite
The Board has considered the Group’s risk appetite and it is considered appropriate to achieve our strategic objectives. Risk appetite is higher
for new product introduction, acquisitions and major change projects in keeping with our growth strategy but lower for health, safety and
environmental controls, regulatory compliance, cyber security and IT resilience.
Our risk appetite has been communicated to the Executive Management to ensure their decision making behaviour is consistent with the risk
appetite set by the board.
IT RESILIENCE
A MAJOR DISRUPTION TO IT
SYSTEMS
We utilise a significant number of IT
systems to support the Group’s production,
technology, marketing, sales and financial
functions. Failure of any of the systems or
corruption or loss of data could have a major
impact on operations
• Development and regular testing of business continuity plans
• Introduce strategy to upgrade or replace key systems
• Detailed and improved plans to implement new ERP platforms
in each of three operating divisions
RISK
RISK DESCRIPTION AND POTENTIAL IMPACT
MITIGATION
RISK
MOVEMENT
The nature and number of security threats has increased during 2014 but the Group has recruited a number of IT security
specialists to better understand the threat landscape and develop appropriate responses to increase resilience
As we have progressed through 2014, European markets have become challenging due to slower growth. Growth in Asia
Pacific is strong but increasing at a slower rate than in 2013. The conflicts in areas such as Ukraine and the Levant with
associated sanctions are concerning and impact our Critical Engineering business
Heightened macro-economic issues will inevitably increase both competitive and pricing risks and will become a more
important factor during 2015. As a result this has been included as a principal risk
CHANGES DURING 2014
CHANGES DURING 2014
CHANGES DURING 2014
CYBER SECURITY
UNWANTED EXTERNAL
ACCESS TO OUR IT SYSTEMS
MACRO-ECONOMIC INSTABILITY
GLOBAL ECONOMIC/POLITICAL
INSTABILITY IMPACTING UPON
OUR ABILITY TO ACHIEVE THE
DESIRED ORGANIC GROWTH
COMPETITIVE MARKETS
INCREASINGLY COMPETITIVE
MARKETS LEADING TO PRICING
PRESSURES OR LOSS OF
CUSTOMERS
Breach of our IT systems by third parties
could result in loss of intellectual property,
theft of financial assets and a reduction in the
integrity of our systems. For customer facing
systems there could be business interruption
and reputational damage
We operate in global markets and demand for
our products is dependent on customer and
market confidence. A downturn in a regional
economy, a change in oil price, movements
in exchange rates or a political event could
impact end market demand and result in a
reduction in both sales and profit
Increased volatility and slowdown in major
economies would result in increased
competition. This could lead to loss of
customers and/or pricing pressures leading
to lost sales and reduced profits
• Increased monitoring of IT systems
• Disaster recovery plans reviewed and tested
• New Group IT Director joined the Company in 2014
• New Group IT Security Director joined the Company in 2014
• Increased IT security resources and establishment of an IT security steering
group comprising representatives for all divisions and corporate offices
• Investment in three-year plan to significantly improve infrastructure
and standards
• Our divisional management are close to key customers and quickly
pick up and feedback change in customer sentiment
• Our new core forecasting process utilises early indications of reduced
demand and the operational output can be right sized appropriately
• The Group operates in all main regional markets and our strategy is to
ensure that we have a balanced portfolio of markets to ensure we are
not too dependent on any one region or market
• Review of capacity utilisation at sites as part of the lean benchmarking
process and business improvement plans to obtain better utilisation
and improved productivity
• Review of standard costings to ensure thorough understanding of
product cost
• Monitoring of market to ensure right balance between cost
competitiveness and quality solutions
RISK
MOVEMENT
RISK
MOVEMENT
RISK
MOVEMENT
NEW
NEW
NEW
33
Strategic Review
Performance Review
Corporate Governance
Financial Statements
Introduction
Annual Report and Accounts 2014
