Integrated Report 2020

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Our risks and opportunities

Renewing our approach to strategic risk management will enable a more inclusive, systemic and long-term approach to risk. This is aimed at creating and protecting value by managing risks, encouraging innovation and improving performance.

We are a resilient and sustainable business supported by ongoing delivery against our strategic imperatives, within our means and tolerances for risk in a highly dynamic environment.

Risk management approach

Our renewed risk approach aims to improve the integration of existing risk management practices into the strategy, structure and operating processes of 'One Imperial', as an integral function of management decision making. Enhancing our risk management processes will encompass the design, integration, implementation and improvement of risk management across all levels of the business. This will support our ability to identify, define, assess and mitigate the risks related to our current and transformational business objectives, and to realise benefits from the strategic opportunities that we have identified. Discussion of these opportunities is embedded throughout this report.

Components of integrated risk management

Risk basics

Minimising incidents and driving
operational excellence

Risk navigation

Dealing with uncertainties in new frontiers and
adopting agile strategies to deal with political,
regulatory, economic and
industry changes

Risk radar

Maintaining a clear picture
of our business threats and
delivering on our commitments

Risk windows

Broadening our horizons and risk appetite
to unlock opportunities


Responding to Covid-19

We play a critical role in the supply of essential services and products in the many countries in which we operate, and measures implemented to contain the Covid-19 pandemic have impacted our operations by varying degrees.

Our primary duty and responsibility during this humanitarian crisis is to lead and act in the best interest of all our stakeholders. First and foremost, our focus is on protecting our people, operations, clients and suppliers from Covid-19 infection, and fulfilling the critical role we play in ensuring the continued supply of the essential products and services needed to respond to this threat.

Our protective measures include strict access control procedures, temperature and health screening, hand sanitisation dispensers, PPE and stringent cleaning and disinfectant programmes for high-risk areas, including trucks used across shifts. Workplaces are continuously monitored using risk assessments and regular Covid-19 updates.

Business continuity plans, pandemic protocols and handbooks set the controls needed to prevent the spread of the virus within our buildings and warehouses, to ensure our employees and their families are kept healthy. Non-essential employees are working from home and essential employees work in shifts and in different offices to meet social distancing requirements. Where feasible, teams are split to ensure continuity in the event of an infection.

Throughout the Covid-19 pandemic, we have worked hard to maintain a sound financial position and to execute our strategy. We will continue to address the risks presented by Covid-19 while executing on our strategic imperatives to build a resilient and sustainable business with a clear purpose in a post-pandemic world.

Read more Performance review: People

Top strategic risks

Our strategic risks are closely linked to the challenges our strategy addresses, and the opportunities it presents. Read more about our strategic responses and the progress we have made in Our strategy.

Strategic risks
Macroeconomic uncertainty and volatility of trade and demand dynamics in key markets
Potential impact:
  • Exposure to a variety of domestic and global economic and market conditions may impact business activity and therefore profitability.
  • Currency volatility and foreign exchange management in key markets.
  • Heightened uncertainty around country regulations and client demands during the Covid-19 pandemic may result in slower than planned recovery in the markets in which we operate.

CHALLENGE: growing the business

Maintain cash flow by managing underperforming assets, optimising capital investment and reducing cost base
Potential impact:
  • Inability to appropriately manage capital levels and contain costs may constrain growth and reduce cash flows.
  • Market factors, particularly related to Covid-19, may increase cost pressure and constrain profitability and growth.
  • Reduced investment in strategic initiatives, particularly digital and innovation and acquisitive growth strategies, due to capital being tied up in non-core assets.

CHALLENGE: asset intensity, commoditised businesses

Attracting and retaining talent
Potential impact:
  • New technologies require new skills, and an understanding of the skills needed for the future, while retaining the right skills for today.
  • Inability to attract and retain necessary skills at all levels may result in existing operational capacity not being fully utilised.
  • Limited pool of qualified skills and ageing workforce increases need for compelling and competitive employee value proposition.
  • Under-investment in transformation and diversity.

CHALLENGE: moving from decentralised model to operating as 'One Imperial

Legacy and structural impediments to effective strategic execution
Potential impact:
  • Ability to deliver 'One Imperial' culture and integrated strategy may be limited by disparate and fragmented legacy systems.

CHALLENGE: simplifying the business from a complex, regional portfolio into an integrated Market Access and Logistics business

Integrating new business acquisitions, projects and partnerships
Potential impact:
  • Inability to unlock synergies and inadequate integration may have an adverse effect on operations.
  • Increased risk of entering markets that are not well understood and reliance on third-party partnerships in those markets.

CHALLENGE: growing the business

Exposure to large principals and dynamic support channels
Potential impact:
  • Increased competition and heightened risk of disintermediation by clients may constrain profitability and business model viability.
  • Dependence on fewer profitable contracts or clients poses significant financial risk in case of non-renewal.

CHALLENGE: growing the business

Socioeconomic and political instability in markets of operation
Potential impact:
  • Greater government and regulatory intervention and scrutiny is exacerbated by increasingly volatile economic and socio-political conditions in most of our markets of operation, with some of our business in declining industries and markets.
  • Business expansion into new markets, services, revenue streams and territories may increase risk exposure.

CHALLENGE: growing the business

Brand integration and reputational awareness
Potential impact:
  • Inability to deliver 'One Imperial' brand and strategic integration.
  • Reputational impact of non-compliance with laws and regulations by employees and third-party partners.
  • Ability to reposition Imperial away from being viewed as a traditional logistics company.

CHALLENGE: moving from decentralised model to operating as 'One Imperial'

Accelerated digital enablement and innovation
Potential impact:
  • Accelerated pace of change driven by disruptive digital technologies may increase the risk of technological obsolescence.
  • Lack of investment in group-wide IT systems to improve efficiency and decision making may impact on our people's ability to deliver operational excellence and increase the risk of business disruption.
  • Inability to deliver new solutions may result in loss of competitive differentiation and operational effectiveness.

CHALLENGE: invest in digital, data and innovation

ESG integration
Potential impact:
  • Increased scrutiny and investor activism on climate change practices and the ability of companies to deliver ethical business practices and sustainable supply chain management, requires increased integration and disclosure of ESG practices.

CHALLENGE: creating shared and sustainable value - focusing on ESG