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Risks and opportunities

To enhance our existing risk management programme, we established an Enterprise Risk Management (ERM) function during 2011, bringing together our Business Risk and Quality, Health Safety and Environment teams, together with strategic elements of our Insurance team. The move has allowed us to adopt more consistent risk management practices and to develop an ERM programme based on the established COSO* framework.

Risk Identification

The identification of risk and opportunities is carried out via a formalised process across all divisions and Group supporting functions, describing the event that may occur (x), its likelihood (y) and the resulting impact (z). This x,y,z process is universally applied across all businesses when developing risk registers.

To assist in the review process the risks are categorised as strategic, operation, financial and regulatory. A full description of these risks is provided in our Annual Report.

Sustainability and Enterprise Risk

We reviewed the likely impact of key sustainability risks and opportunities on the business by undertaking a formal workshop with representatives from each business area: risk, operations, procurement, HR, Sales and Marketing, fleet and energy management. We looked at the likelihood and financial impacts of each risk, then scored each of them to determine their significance to the business. The table below shows the results of this review and informs our 2020 sustainability targets. It is the SSG’s responsibility to regularly monitor and review the sustainability risk register.

*COSO - the Committee of Sponsoring Organisations of the Treadway Commission

Risks

Clients

Key risk area

Potential financial impact

Core mitigation

Client engagement

Client relationship management and understanding of client’s economic situation are key to customer satisfaction and retention.

Loss of contracts, less wins, slower growth, lower margins.
We regularly measure customer satisfaction levels and give operational teams the tools and training to make improvements when needed.
People

Key risk area

Potential financial impact

Core mitigation

Our capability to attract and retain talented people is critical to our ongoing performance
Employee engagement with our company values is critical to motivation and ultimately retention.

Increased employee turnover, reputational impacts, loss of knowledge.
We continue to implement our talent management programme and have succession plans in place for key management. We also regularly measure our employee engagement levels and make sure managers have the tools to take action on any concerns raised.
Diversity as a differentiator
Valuing our people’s diverse background will ensure they engage with our company values.

Increased employee turnover, reputational impacts.
We thrive to embed diversity in all our practices through robust policies and procedures as well as a range of training courses available to everyone via e-learning.

Risk

Key risk area

Potential financial impact

Core mitigation

Health and safety
Through the scale and scope of our business, our activities, if not appropriately managed, have the potential to harm employees
or third parties.

Prosecution, fines, reputational impacts and related adverse business performance.
We continue to embed our management systems, our core competency requirements and our key Work Safe Home Safe! behaviours and ensure that all those who may be impacted by our activities go home safely at the end of the day.

Responsibility

Key risk area

Potential financial impact

Core mitigation

Partners
Effective and long-term relationships with our suppliers will enable Mitie’s success. A lack of support from our supply chain could result in us not achieving our sustainability objectives.

Reputational impact, reduced bottom line.
We engage with our suppliers on their sustainability targets and look to embed our values and beliefs into all our relationships.
People
A lack of appropriate engagement with local communities could reduce our ability to operate.

Fewer contract wins, reputational impact.
We encourage volunteering and actively promote employment regeneration and community engagement through a variety of programmes such as the Real Apprentice and Skills Centres.
Planet
Increasing usage of scarce natural resources will impact future well-being.

Increased cost of fuel, water, carbon reduces profitability. Increased consumption has negative reputational impact.
Reducing our overall carbon footprint is the responsibility of everyone at Mitie and we encourage our internal stakeholders to use less natural resources by promoting efficient driving, better use of public transport and video conferencing, for example.

New markets

Key risk area

Potential financial impact

Core mitigation

New markets impact our sustainability ambitions
The development of business in new markets and territories is key to Mitie’s profitable growth. A lack of proper due diligence could negatively impact the Group with regards to sustainability targets.

Financial and reputational impacts.
We formally review our decisions to enter new markets, territories or acquire new businesses with our sustainability framework in mind to manage this risk. Newly-acquired businesses undergo an integration plan which includes defined sustainability objectives.

Operational efficiency

Key risk area

Potential financial impact

Core mitigation

Contract performance
Large-scale integrated contracts are becoming increasingly important for Mitie and efficient management of people and technology are paramount to their success.

Less wins, slower growth,
smaller margin, less profit.

We regularly review contract performance with our clients, both at mobilisation and throughout the life of the contract.

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