VT Group is committed to ensuring that high quality risk management systems are in place across the group. The objective is to support the delivery of long-term sustainable returns for shareholders and to safeguard the interests of customers and employees.
Group Risk Management Process
VT Group’s management operates a risk assessment process to identify and assess the risks affecting business performance. The process requires each business division to identify the key risks to their plans, their likelihood and impact as well as the actions taken to manage those risks. Divisional risk registers are reviewed by their respective management teams and the consolidated risk profile for VT Group as a whole is challenged by the Proxy Board.
Below are our key risk areas and how we manage them.
Contract Performance Management
A significant proportion of our business derives from long term, fixed price contracts with customers. The challenge to our business is the management of these long-term contracts to customer satisfaction while maintaining expected returns.
To address these risks we hold regular project appraisals, maintain continued dialogue with the customer and are progressively applying our Project Lifecycle Framework to contracts across VT Group. All major contracts in all business divisions have a risk identification and management process in place and significant risks are considered for inclusion in divisional risk registers.
Dependence on Key People
The recruitment, retention and development of highly skilled, competent people is key to VT Group’s success. The VT Group business succeeds because it puts the right people in the right positions, and then empowers them to collaborate with the customer and respond quickly to their needs. Our people are the key to our ability to achieve planned strategic growth. We manage this risk by actively engaging with our people through communication forums and have introduced an employee opinion survey to obtain a better understanding of the range of issues that contribute to the level of staff satisfaction.
Growth Strategy & Major Bid Pricing
VT Group’s expansion encompasses organic growth, acquisitions and potentially entering into new markets. Acquisitions and entry into new markets bring an extra element of risk as these may involve activities not currently carried out by VT Group. To address these risks we undertake extensive due diligence, carefully consider the company’s ability to manage and fund any new activities arising via a rigorous bid acceptance process and mandate that all such activities require Proxy Board approval.
Dependence on Government Contracts
Given that a significant proportion of our business activities are derived from government authorities, VT Group’s business is susceptible to changes in government policy, budget allocations and the changing political environment. VT Group has sought to address this risk in recent years by diversifying the service offering from a largely UK-based defense-oriented business to provision of a broader range of services internationally.
Changes in Laws & Regulations
VT Group is subject to various laws and regulations in different jurisdictions, including state aid, procurement, export control, taxation and environmental health and safety laws. These laws and regulations are complex, subject to change and can vary from country to country. VT Group addresses this risk through formal compliance policies, employing suitably qualified individuals and retaining appropriate professional advisors.
Joint Ventures
VT Group has a number of joint venture operations. Given their importance to the company, the boards of these joint ventures include executive directors and members of the VT Group executive committee responsible for representing VT Group’s interests. These individuals maintain regular dialogue with key stakeholders, actively engage with the entities and gain operational involvement where appropriate.
Environmental, Health & Safety Liabilities
VT Group’s operating businesses are exposed to risks associated with the contamination of their sites and former sites, non compliance with environmental, health and safety law and personal injury claims resulting from injuries sustained at work, including historical exposures to asbestos. VT Group is fully committed to maintaining a framework of company-wide policies and procedures to minimize these risks.
Financial Risk & Capital Management
VT Group operates a number of policies to protect against financial and capital management risk. These include policies covering liquidity, credit, interest rates, foreign currency and market price risk.
For more on our approach to managing risk, please see our Financial Reports page