RISK MANAGEMENT
Governance and culture The Board of Directors has overall responsibility for the Group’s risk appetite and risk management strategy. Roles and responsibilities for managing risks across the discoverIE Group have been clearly defined as shown in the diagram below.
Risk profile The Group’s overall risk profile is mitigated by a number of overriding factors, including: ■ Our business units operate largely independently of one another, from over 69 geographically dispersed sites, and so if an issue were to arise in any one business, it would be less likely to impact other businesses in the Group. We also have business continuity arrangements in place to identify where there is scope to switch production between certain sites if needed. ■ We operate in 21 countries and no single site represents more than c.10% of Group turnover or c.8% of Group profit. ■ Most of the Group’s businesses operate on separate IT systems, which helps to limit the potential impact of a cybersecurity incident affecting the wider Group. During the year, workshops were held with each operating company to assist with further enhancing information security controls at a business level. In addition to this, the Group has implemented consistent web and endpoint security (i.e. security measures across all devices and web connections to ensure a uniform level of protection), as well as continuing to maintain an outsourced Security Operations Centre
(“SOC”) to monitor and respond to IT security threats 24/7. During the year, the Group conducted a cyber incident response “table-top” exercise involving key management personnel and supported by external specialists. This exercise tested the Group’s readiness to respond to a range of cyber scenarios and identified opportunities to further strengthen preparedness. ■ The Group has very limited reliance on any single customer or supplier, with the largest customer representing approximately 6% of Group revenue. ■ The Group manufactures and sells multiple product lines, across multiple geographies and market sectors, removing reliance on any single revenue stream. This is further reinforced by the innovative, bespoke nature of the Group’s products, which continue to evolve as circumstances change. ■ The Group operates in structural growth markets, which reflect long-term needs and are less cyclical in nature. ■ The Group has enhanced its Export Control Framework during the year, including refreshed risk assessments, strengthened central support to operating companies and the rollout of mandatory training, supporting compliance with applicable regulations across the jurisdictions in which the Group operates.
Board ■ Overall responsibility for corporate strategy and risk management ■ Defines the Group’s appetite for risk
Audit and Risk Committee ■ Reviews effectiveness of Group’s risk management framework and internal controls ■ Oversees the effectiveness of Group Internal Audit
Sustainability Committee ■ Oversees the Group’s overall sustainability progress ■ Reviews climate-related risks and the Group’s response
Group Management Committee ■ Management of the Group and delivery of the strategy ■ Monitoring of key risks and compliance with relevant laws ■ Regular reviews of the Group’s risk management framework
Divisional Management ■ Oversight and review of operational risks
Group Functions ■ These include Finance, Treasury, Risk, and Group Technology Services (“GTS”), and support operating companies to integrate into the Group’s risk management framework
Group Internal Audit ■ Monitors compliance with the Group’s internal controls framework ■ Conducts or commissions internal audits
Risk appetite One of the Group’s core principles is to deliver its strategic priorities in a sustainable and responsible manner. This requires that the Board gives careful consideration to the nature and level of risks that the Group should accept. The Group draws a clear distinction between those risks that it is more willing to take (typically relating to advancing business prospects) and those that it is less willing to accept (e.g. safety, reputational, regulatory or compliance risks). The following table provides a summary:
Operating Companies ■ Identify internal and external risks
■ Responsible for the implementation of risk mitigation actions and internal controls and compliance with policies ■ Responsible for compliance with relevant laws
Risk tolerant (Willing to take greater risk)
Risk neutral (Taking a balanced approach to risk)
Risk averse (Taking as little risk as possible)
The Group’s risk management framework follows a three lines of defence model. The first line of defence is operational management in our businesses. Day-to-day risk management controls, policies and procedures are implemented and monitored by the local management teams with oversight and review by Divisional Management. This is conducted within a series of delegated authority levels. Relevant internal control systems are in place to identify, evaluate and manage the Group’s business risks. The second line of defence comprises Group functions such as Risk, Finance, GTS, Treasury, and Tax. These functions are responsible for establishing frameworks, policies and oversight activities to support and monitor the operation of risk management and internal control processes across the Group. The Group Internal Audit function provides independent, risk- based assurance over the effectiveness of risk management processes, governance and key internal controls, and serves as the third line of defence. As well as carrying out full audits on individual entities, the team conducts thematic audits, focusing on specific areas across the Group. All audits conducted by the Group Internal Audit function are completed on site. During FY 2025/26, the team continued
to support the Group’s preparations for compliance with the revised UK Corporate Governance Code, including Provision 29. This has included contributing to the identification and documentation of the Group’s material controls and supporting the development of the associated assurance and reporting processes that will underpin the Board’s future statement on the effectiveness of internal controls. The Group operates a decentralised management model that is target and results driven, with a strong culture of open, constructive communication and a willingness to listen. The Group Internal Audit function applies this culture in how it operates and reviews control environments across the Group. In pursuing the Group strategy, a number of key objectives are agreed annually for the Group and for each business unit. Progress against these is reported on a regular basis to Divisional and Head Office functional management, the Group Management Committee and the Board. Having a clear understanding of our strategy and objectives assists with the effective identification and management of existing or emerging risks that have the potential to prevent or hinder these objectives from being achieved.
■ Product innovation
■ Investment in facilities
■ Product safety
■ Operating in new markets
■ Business development initiatives
■ Health and safety
■ Acquisitions and disposals ■ Cyber risks ■ New customers and suppliers in existing markets ■ Regulatory/covenant compliance ■ Foreign exchange ■ Foreign exchange transactional risk ■ Markets with greater business cyclicality ■ Environmental risks
The above table provides a high-level summary of the various types of risk that face the Group, with the most significant and material items being more specifically described in the table of Principal Risks and Uncertainties on pages 79 to 84. Regardless of the appetite in respect of a particular risk, all risks are identified and managed in the appropriate manner. Enterprise risk management discoverIE applies an Enterprise Risk Management framework to identify potential events or circumstances that may affect the Group, and to manage associated risks through defined mitigation actions and internal controls. These include climate- related opportunities and risks, further details of which can be found on pages 62 to 66 of this report. The risk management framework is made up of a number of discrete steps to identify, assess, mitigate and monitor risks.
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discoverIE Group plc Innovative Electronics
Annual Report and Accounts for the year ended 31 March 2026
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