Risk Management
Principal risks and uncertainties The Group has determined its key principal risks as those risks that the Group considers material and which could have a significant impact on the Group’s financial position, its operations and/or reputation. Risk management The Group’s principal risk management process comprises risk registers and reviews, control risk self-assessment and a Risk Management Committee. The Group faces a diverse range of risks and uncertainties which could have an adverse effect on its success if not managed. The Group has designed and embedded a risk management process to identify and monitor potential risks and uncertainties relevant to the Group and then seeks to eliminate or reduce these to the lowest extent possible to protect the business, its people and customers, and support delivery of its strategy. The risk management process is intended to mitigate and reduce risk to the lowest extent possible, but cannot eliminate all risks to the Group and its businesses. The Group’s risk management process and controls can only provide reasonable and not absolute assurance against material misstatement or loss. The risk management process incorporates both top-down and bottom-up elements to the identification, evaluation and management of risks. Mitigating controls are identified and opportunities for the enhancement are implemented. Risk governance The Board of Management is ultimately responsible for the Group’s system of risk management and internal controls, and reviews their effectiveness on an annual basis. Risk overview The Board of Management recognises that the risks faced by the Group change and it regularly assesses risks to manage and mitigate any impact. Summarised are the key risks, not in order of significance, that the Board of Management has identified as the primary risks to the Group’s successful financial performance, reputation or operations as at the year ended 31 December 2016.
Financial risk management Whistl Limited has established processes to identify, monitor, mitigate and where feasible, eliminate these risks.
MARKET RISK The Group’s activities are principally provided to UK businesses and, as a result, the fortunes of the business are linked to the general health of the UK economy. The Group’s exposure is limited by having a broad customer base but the business remains exposed to the vagaries in marketing budget expenditure that was disrupted by e-substitution and recession and the continuing evolution of the market. REGULATORY RISK The Group operates in a regulated market which affords a level of protection against any anti-competitive behaviour, mandates access to Royal Mail’s network and controls elements of Royal Mail’s pricing The Regulator, Ofcom, has recently conducted a Fundamental Regulatory Review and concluded that these protections should extend until 2022. Management considers this risk to be manageable. CREDIT RISK The Group has some credit risk because a material amount of its turnover is the pass-through to customers of Royal Mail’s, and other third party, charges. Those charges are payable on strict terms. There are, however, strong credit controls in place and in addition, the Group utilises credit insurance. LIQUIDITY AND CASH FLOW RISK In order to maintain liquidity and to ensure that sufficient funds are available for ongoing operations and future developments, all risk exposures are monitored by the Board of Management regularly. The prime focus being performance and strategic issues, as well as the mitigation and management of these risks to an acceptable level. The Group expects to meet its financial obligations through operating cash flows. In the event that the operating cash flows do not cover all the financial obligations, the Group has substantial, fully committed unused credit facilities available. PRICE RISK Pricing of Royal Mail services is determined by Royal Mail but is monitored by Ofcom.
The Group is not exposed to any significant currency or interest rate risk.
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Strategic Report | Whistl Annual Report 2016
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