61 Vodafone Group Plc Annual Report 2024
Strategic report
Governance
Financials
Other information
Portfolio transformation and governance of investments Description Failure to manage appropriate joint ventures (‘JVs’), and other investments or challenges to the timely completions of inflight portfolio actions may result in a loss of growth potential and shareholder value.
Supply chain disruption
Technology resilience and future readiness
Description Disruption in our supply chain could mean that we are unable to execute our strategic plans, resulting in product and service, unavailability and delays, increased cost, reduced choice, and lower network quality.
Description Network, system or platform outages or ineffective execution of the technology strategy could lead to dissatisfied customers and/or impact revenue.
Risk ranking movement Risk owner Group Chief Technology
Risk ranking movement Risk owner Group Chief Executive Officer/CEO Vodafone Investments
Risk ranking movement Risk owner Group Chief Financial Officer
Officer/Group Chief Network Officer
Scenario Regulations imposed delays or disruptive remedies for in-market consolidation. We are adversely impacted by market remedies imposed by regulators following in-market consolidation. Additionally, we may face unforeseen challenges in driving synergy benefits. Emerging factors Adverse change in the regulators’ approach to in-market consolidation may limit opportunities for value-accretive market structures. Additionally, our internal capability and skill sets may not align with the needs of our portfolio structure as we increase our focus on JVs and investments. Mitigation activities We will continue to mitigate the risk in transaction execution by conducting broad stakeholder engagement and having dedicated teams working on any transition and future services arrangements. We have reviewed a number of our investment governance mechanisms and where needed enhancements have been made. In our JV governance and ways of working policy, we outline the principles for the shareholder agreement and corporate governance. This includes how we engage with the individual entities. Furthermore, we now have a dedicated ExCo member and team with responsibility to maximise the opportunities and minimise the risk.
Scenario Political decisions affecting our ability to use equipment from specific vendors could cause trade and supply chain disruptions. Emerging factors Changes in the political landscape outside Vodafone’s control may significantly impact the upgrade and maintenance of our network. For example, US and China tensions resulting in a ban of high-risk vendors, long-term impacts from the war in Ukraine, or potential open conflict between China and Taiwan could impact product availability. Disruption may lead to an increase in our costs in areas such as raw materials, energy, and shipping, while at the same time triggering shortages or extended lead times for critical components. Mitigation activities We are closely monitoring the evolution of the geopolitical environment. This enables us to respond to emerging challenges and to comply with regulations, economic sanctions and trade rulings. We also mitigate our exposure through having multi-year contracts with key suppliers, forecasting and forward-ordering our inventory requirements in anticipation of extended lead times and continuing to execute our optimisation strategy for network infrastructure logistics.
Scenario A major outage in a critical data centre or a failed IT transformation activity could reduce service to customers, affecting revenue and reputation. Emerging factors Like most mature companies, we continue to proactively manage our systems life cycle. We closely monitor our technology landscape for additional systems nearing end of life and have associated plans to mitigate or replace. Another emerging factor is the inability to deliver large IT transformations at the forecasted pace because of changes in macroeconomic conditions, market pressures, and evolving customer expectations. Additionally, extreme weather events, and deliberate attacks on national critical infrastructure in times of war or instability, could also heighten the risk of technology failure. Mitigation activities To reduce the impact of service disruptions, we establish recovery goals for critical assets. A global policy outlines the key performance indicators (‘KPIs’) necessary to guarantee the resilience and security of technology services. We prioritise IT transformation and modernisation programmes, such as the Oracle Cloud Infrastructure, SAP RISE, and the recent Azure cloud agreement with Microsoft, to address specific technology resilience risks, while streamlining business processes and simplifying the portfolio. In addition, IT transformation programmes carry risks of scope creep and cost overruns; therefore, we are increasingly using an incremental delivery approach to be able to achieve benefits and adapt quickly, while maintaining strict governance.
Year-on-year risk ranking movement Increasing Decreasing
No change
New/change in scope
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