Vodafone 2024 Annual Report

62 Vodafone Group Plc Annual Report 2024

Strategic report



Other information

Risk management (continued)

Emerging risks We face a number of uncertainties where an emerging risk may potentially impact us. In general, we encounter three types of emerging risks. The first type is a new risk in a known context, where it emerges from the external environment and can impact the organisation’s activities. An example of this is the potential impact of conflict in the Middle East. The second type is a known risk in a new context, such as the need for new skills and talent to support future services. The third type is a new risk in a new context, such as the impact of the commercial space age. We continue to identify new emerging risk trends, using inputs from analysis of the external environment and internal sources. We evaluate our risks across different time periods, allowing us to provide the appropriate level of focus on these emerging risks. We categorise our emerging risk into five different categories: technological, political/regulatory, economic, societal and business environment, so that the relevant expertise across the business can assess the potential impacts and time horizon of these risks. In some cases, there may be insufficient information to fully analyse and understand the likelihood, impact or velocity of the risk. As a result, we may not be able to develop a complete mitigation plan until we have a better understanding of the threat. Our emerging risks, within predefined risk categories, are provided to the ExCo and the Audit and Risk Committee for further scrutiny. Building strong foundations We continue to enhance and embed the global risk management framework with the objective of maturing our approach. This promotes consistency across all the markets in which we operate. Over the course of the year under review, we have: – Enhanced our risk tooling and methodology to establish a more straightforward process for documenting and reporting risks from our local markets; – Carried out an evaluation to gain a deeper insight into the physical and transition risks associated with climate change; – Improved the process of linking risk and mitigation actions to the budget to improve risk decisions on the risk treatment strategy; – Following the risk awareness campaign in the previous year, conducted a risk culture survey with the Group Senior Leadership Team (‘SLT’) to gather insights into their understanding of the risk management practices; and – Conducted an external review to benchmark and evaluate the maturity of our risk framework and process.

Watchlist risks Our watchlist risk process enables us to monitor material risks to Vodafone Group that fall outside our principal risks. These include, but are not limited to: Environmental, Social and Governance (‘ESG’) Failure to prioritise ESG considerations may result in reputational damage. Negative publicity related to environmental harm, social issues, or governance failures can lead to loss of trust amongst customers, investors and the broader public. Read more about our approach to ESG on pages 32 to 56 Read more about climate-related risk on pages 64 to 69 Product innovation Failure to create and deliver new products and service categories that diversify revenue growth, unlock new consumer engagement and mitigate disruption from digital natives. Legal compliance Non-compliance with laws and regulations including anti-bribery, competition law, anti-money laundering, trade controls and sanctions, potentially leading to fines and reputational risk. Read more about ‘Doing What’s Right’ training on page 44 Read more about our anti-bribery, corruption and fraud policy on pages 53 to 54 Tax Tax risk covers our management of tax across the markets in which we operate and how we respond to changes in tax law, which may have an impact on the Group. Read more about our tax risk and our approach to tax and our economic contribution on page 53 Infrastructure competitiveness We continue to provide the appropriate broadband technology in our fixed and mobile networks. Our technology 2025 strategy incorporates our fixed and mobile network evolution steps to enhance our coverage and network performance. Click to read more about our Technology 2025 Strategy in our investor briefing: investors.vodafone.com/vtbriefing Key changes to our principal risks: – The risk of Supply chain disruption has increased due to political uncertainty related to the use of high-risk vendors in our European markets. – The risk of Adverse changes in macroeconomic conditions has decreased as we see an easing in the external economic outlook. Additionally, over the past year we have implemented controls, such as hedging for inflation and energy costs to manage the impact of the risk. – The Company transformation risk has been broadened to encompass organisational simplification and other large non-portfolio transformation projects. – The scope of the Technology resilience and future readiness risk has been expanded to include the sub-risk end-of-service-life and legacy infrastructure, as our technology environment is ever-expanding, and we see an increasing number of assets nearing their end of life in this assessment period. – The strategic transformation risk was refocused on Portfolio transformation and governance of investments . As a result, the sub-risk of product innovation has been moved across to the watchlist risks, as detailed in the section below.

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